Marico's Digital Brands Cross Rs 1,000 Crore ARR Mark

Marico's digital brands have crossed the Rs 1,000 crore annual recurring revenue mark, and the fast-moving-consumer-goods major expects food and premium personal care to contribute 25% of its India revenue, its managing director and chief executive officer Saugata Gupta said.

Marico's digital brands -- including Studio X, Pure Sense, Beardo, and True Elements -- have a diversified portfolio, ranging from premium personal care products to food, and are on a high growth momentum and likely to continue their faster pace, he added.

"Our digital brands have crossed Rs 1,000 crore in ARR (annual recurring revenue), and we expect the diversified portfolio...including premium personal care, to contribute at least 25% to our overall India business, over the next three years," Gupta told PTI.

Beardo, its men's grooming brand, has almost turned profitable, delivering a double-digit earnings before interest, taxes, depreciation and amrotisation, and its direct to consumer wellness brand Plix has achieved break-even, he said.

"Our objective is to immediately take it to a mid-single-digit to high single-digit Ebitda," Gupta said, adding that the aim is "to grow well, and at the same time, grow profitably."

The company's healthy food brand True Elements and Just Herbs, which operate in Ayurvedic beauty and personal care, have still not reached the break-even point, he added.

"So, over the next 18 months, we need to ensure they break even and continue to grow. Our objective of achieving 2.5x of fiscal 2024 ARR and a 10 per cent Ebitda by fiscal 2027 remains intact," he said.

Besides, Marico's food business, in which it operates with brands like Saffola and Coco Soul, has crossed the Rs 1,000 crore ARR mark.

"We expect the Foods category to return to over 20% growth by fourth quarter and also continue that momentum in first quarter next fiscal. Our focus remains on 'fewer, bigger, better, and relevant' for the food business, as we have learned that scale drives profitability," Gupta said.

Over the last two years, Marico has improved gross margins by 1,000-bps in this and has plans to continue this journey.

"It's critical that the diversified part of our portfolio not only drives top-line growth but also becomes significantly profitable," Gupta pointed out.

Besides, Marico also expects good performance from its core brands by the next fiscal year.

"We also expect an improvement in the growth of our core brands as we move into next year. As the pricing normalises and cost pressures ease, Parachute should return to growth," he said, adding that "value-added hair oils have seen a strong turnaround, and we are confident of delivering double-digit growth over the next two quarters".

According to Gupta, there has been an 'improvement in the urban market' and "inflation has come down".

"Overall, the landscape is improving, and the environment is gradually getting better. Rural demand has been fairly stable, and urban markets are also showing improvement. The GST cut should further support in driving consumption," he said.

In the September quarter, Marico had reported a marginal decline in its consolidated net profit to Rs 432 crore on account of a high base and inflation in key commodities.

However, its revenue from operations rose 30.7% to Rs 3,482 crore, helped by an underlying volume growth of 7% in the India business and constant currency growth of 20% in the international business.

Marico, which has crossed the milestone of becoming a Rs 10,000 crore revenue company in fiscal 2025, is aiming to be a Rs 20,000 crore firm by 2030, growing its revenue two-fold in the next five years.