Marico Expects Margin Pressures To Ease In Second Half Of FY22

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Marico Ltd. expects margin pressures to ease in the second half of the ongoing fiscal.

“I think as far as margin is concerned, we have reached the lowest which was last quarter… we will start improving and are pretty confident that by the second half of the year, will start picking up margin to the medium term,” Saugata Gupta, managing director and chief executive officer at Marico, told BloombergQuint in an interview.

The maker of blue-bottled Parachute coconut hair oil, in a statement on the exchanges after fourth-quarter results, had said it would be comfortable maintaining its threshold operating margin of more than 19% over the medium term.

Besides, Gupta expects Marico to deliver 8-10% volume growth in medium term. He hopes that the impact of a surge in Covid-19 cases on economic activity is limited. “Obviously, there’ll be a short-term impact but not a long-term impact on economic activity,” he said.

The impact, Gupta said, was seen mostly in the last 10 days of April. “We were better prepared from the logistics and the supply chain point of view,” he said. “We believe things should start improving sometime in the next three-four weeks, and there will be a catch-up. At this point in time, we are trying our best in terms of ensuring availability, we don’t have any issues.”

  • Marico reported a year-on-year volume growth of 25% in the quarter ended March, while its operating margin was down 300 basis points to 15.9%.
  • Its revenue from operations rose 34% over the year earlier to Rs 2,012 crore. The company, according to its statement on exchanges, pegs revenue growth at 13-15% in the medium term.
  • Net profit increased 17% year-on-year to Rs 238 crore in the quarter ended March.
  • Its foods portfolio crossed the Rs 300-crore mark in FY21. According to Gupta, it can reach Rs 850 crore FY24 if the segment continues to grow at 40-50%.

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