CMP: Rs258
² Marico reported 6.6%/26.4%/25.7%, revenue/EBITDA/PAT growth to Rs1,307cr/Rs217cr/Rs138cr, respectively. Registered overall volume growth of 10.5% in Q4FY16. Highest gross margin of 630bps resulted into highest EBITDA margin by 260bps to 16.6%.
² Key positives: (a) registered double digit volume growth of 11% in value-added hair oils (VAHO); (b) significant 630bps (24-quarter high) expansion in gross margin to 54% and 260bps jump in EBITDA margin to 16.6%; (c) youth portfolio reported 19% growth in value terms (post 3 consecutive quarters of decline) on double digit growth in gels (~40% of total youth portfolio); (d) Market share gains continue in more than 80% of the portfolio on 12 months MAT basis; and (e) strong 11%, 13%, 8% and 10% CCG in Bangladesh, MENA, South East Asia and South Africa, respectively. Marico sold Goa plant which was non-operational for two years, resulting in Rs7.5cr post tax gain which is included under Other income head.
² Stellar show across the board, including Parachute: In Q4FY16, Marico had gained market share in more than 80% of its portfolio. To remain competitive in the hair oil business, Marico had cut prices by 6% in Parachute in Q4FY16 on the back of softening copra price by 19% QoQ, resulting a cumulative decrease of 12% in FY16 and did a 6% volume growth. Marico is looking at sustainable 13%-15% volume growth in VAHO going forward. Marico has achieved double digit volume growth in Saffola. In Youth portfolio (19% growth in value terms), Set Wet Gel clocked robust double digit growth led by re-launch in Q4FY15; deos and Livon declined YoY. International business reported double digit volume growth. Management expects Middle East business to become consistently profitable in FY17.
Amar Ambani
Head of Research
IIFL
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