Revenue growth to come back in H2, would continue portfolio diversification: Marico MD

Homegrown FMCG major Marico expects revenue growth to come back in the second half of the fiscal, and sluggish rural demand to gradually improve, said Saugata Gupta, Managing Director and CEO of the company.

It has taken price corrections after the softening of inflation in the domestic market in the last two quarters, which has some effects on its revenue growth. However, it has helped it either gain or sustain market share and also increase penetration in some of its portfolio, he added.

In the next two quarters, the revenue growth of the company would be in line with volume growth, Gupta told PTI.

"Revenue growth is expected to move into the positive territory in H2 as pricing deflation in the domestic business steadily tapers off. The company has taken price drops in its core brands as Saffola and Parachute," Gupta added.

Last week, Marico, which owns popular brands like Saffola, Parachute, and Livon, reported a 17.2% increase in consolidated net profit for the September quarter. However, its revenue from operations marginally reduced to Rs 2,476 crore YoY.

Marico has also reported an underlying volume growth of 3% in the domestic business.

When asked about rural markets, he said it will gradually improve as sentiments are improving.

"One of the good things is that there was some uncertainty due to rainfall in August and it improved significantly in September. Overall, we are also now going to lap a lower base. So therefore I see the revenue and volume situation both improving," he said.

Over its food and premium personal care business, which now contributes Marico's 20% of domestic revenue, Gupta said the "diversification journey has worked well" for the company, which was earlier known for its healthy edible and hair oil business.

"We expect this to continue," he said adding, "The two things which we are working on are how to improve the gross margin of foods and secondly, in the premium personal care business, in the digital part of the business how to keep on reducing the cash burns"

Marico has made significant strides in both segments and it has to ensure that if these become a significant part of the business, they continue to deliver over the next three to four years and EBITDA in line with the overall company EBITDA.

"We expect this sector of this business to grow by over 15-20%," he said adding, "We will look at good growth at the same time the growth which is sustainable in terms of profits."

Marico has introduced products ranging from oats, honey, soya to noodles, under the Saffola brand, to contribute half of its revenue.

"In our Saffola franchise, food is currently at 25%. We expect food to become 50% of the franchise over the next four years," he added.

Besides, Saffola, Marico has acquired two brands Plix and True Elements, which operate in the premium food space.

The company plans to scale its food businesses further, as profitability happens with scale, Gupta said.

Marico, which sells oats under its Saffola brand, has become a leading player in oats beating rivals such as Quaker Oats.

"I think the next two products, which are scaling up well is honey and soya," he said adding, "we still need to scale up spreads but amongst all of them we are very bullish on snacking" and are currently prototyping ragi chips in the segment.

Marico's new portfolios include Digital-first brands such as Set Wet, Beardo, Just Herbs, among others.

"The company is already operating in categories like breakfast, immunity, plant protein, spreads, and snacking, and expects to see more range expansion rather than getting into newer categories," he added.

When asked whether Marico has plans to add another brand in the food space, Gupta said: " We have also two premium brands in the food space, which play in the digital space one is Plix, which operates in the wellness segment and we have True Elements which again operates in premium food. So these are the two premium brands of food brands. We have their support. I think it is enough. We do not see ourselves getting into any new brands," he added.