FMCG major Marico said on October 3 said it sees its second quarter consolidated revenue growing at about 30% year-on-year, driven by price hikes and higher sales of its premium hair oils.
Revenue from operations grew 8% in the year-ago quarter.
The firm said the underlying volume growth moderated sequentially and had to absorb impact of channel disruption in September due to GST cuts.
Packaged cooking oils, a staple in households, have largely weathered a slowdown in urban demand that has dented the sales of other consumer conglomerates over the last few quarters.
Its core hair oils segment saw volumes decline, hurt by a 60% price hike that was necessitated by surging input costs. Premium hair oils, on the other hand, saw growth in the high-teens percentage.
"During the quarter, the India business continued to exhibit steady momentum through the months of July and August, while having to absorb the transitory impact of disruption in trade channels and purchases by the Canteen Stores Department ahead of the implementation of new GST rates in September. Despite the same, underlying volume growth in the India business remained in high single digits, albeit moderating sequentially. Parachute recorded low single digit decline in volumes amidst unprecedented hyperinflationary input cost and pricing conditions.
"After normalising for ml-age reductions in lieu of price increases, the brand was flattish in volume terms during the quarter, demonstrating formidable strength even after effective price hikes of more than 60% on a year-on-year basis. Saffola Oils delivered flattish volumes with a high base and revenue growth in the high teens. Value Added Hair Oils delivered high teens growth, reflecting a sustained recovery path. We expect the franchise to maintain a healthy growth momentum over the near and medium term, supported by the strategic focus in the mid and premium segments of the portfolio, enhanced direct reach driven by Project SETU and the recent GST rate rationalization. Foods and Premium Personal Care (incl. digital-first brands) maintained the accelerated scale up and kept up the pace of diversification," said Marico in a stock exchange filing.
Marico said gross margin is expected to come under incremental pressure, on a relatively high base and partly due to the pricing-led high denominator effect.
"We expect gross margin pressures to ease in the second half of the year. Despite the input cost push, we sustained brand-building investments to reinforce the long-term equity of our franchises and drive accelerated portfolio diversification. In addition, we also extended discounts on the pipeline inventory to our channel partners during the two weeks leading up to the effective date of the GST rate changes. In the given context, we expect modest operating profit growth on a year-on-year basis," the company said.
On October 3, Marico shares on NSE closed 1.3% higher at Rs 711 apiece.
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