Marico: Q4FY14 Result Analysis

Marico, during quarter ending March 2014, has posted a growth of 7.36% in net sales on YoY basis at Rs 1072.05 crore compared to Rs 998.59 crore in Q4FY13. EBITDA grew by 28.26% to Rs 154.27 crore compared to Rs 120.28 crore in Q4FY13. EBITDA margin also up by 235 basis point. Profit After tax (PAT) grew by 8% on YoY basis to stand at Rs 89 crore.

In the media release, the company has mentioned that the business has shown steady recovery in volume growths with sustained improvements in market shares. In India, due to the weak demand environment, the growth rates of various segments have come down. This has impacted the Company’s growth rates as well. However, the Company has demonstrated strong brand equity by continuing to grow faster than the market.

The domestic FMCG Business of company in India achieved a turnover of Rs 812 crore during the quarter, a growth of about 16% over Q4FY13. The volume growth in India saw an up-stick and was at 6% for the quarter. The overall sales growth was bolstered by the price increases taken across the portfolio to cover a major part of the input cost push.

Parachute’s rigid portfolio (packs in blue bottles), recorded a volume growth of about 10% for Q4FY14 and 4% for FY14 over the corresponding period last year. Q4FY14 has shown a recovery in volume growth from an abnormally low growth in Q3FY14. The Saffola refined edible oils franchise grew by about 11% and 9% in volume terms during Q4FY14 and FY14 respectively, reporting a continuous improvement in performance. The brand has been able to reverse a softer performance in 2012-13 and accelerate in the second half of the year based on its effective equity building communication.

Marico’s hair oil brands (Parachute Advansed, Nihar Naturals and Hair & Care) grew by 5% and 11% in volume terms during Q4FY14 and FY14 over Q4FY13 and FY13 respectively. The single digit volume growth during the quarter can mainly be attributed to the high base of 24% volume growth in Q4FY13. Due to the challenging environment, the body lotion category growth rate has fallen to single digit. Parachure Advansed Body Lotion has maintained its no.3 position with a market share of 6%. The Company expects the brand to be back on track next year.

On completion of 25 years since incorporation, the Company has declared a one-time Silver Jubilee Third Interim Dividend of 175% (Re.1.75 per share) on the equity share capital of INR 64.48 crores at the meeting of its Board of Directors held in March 2014. Therefore, the Company has declared a total dividend of 350% in FY14. With this the dividend payout ratio has increased to 47.3% in FY14 as compared to 19.3% in FY13. Excluding the one-time dividend, the payout ratio for the year is 24.1%. The Company will endeavor to improve the dividend payout ratio further depending on the acquisition pipeline.