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Systematix Research Report
Marico Ltd.'s Q2 FY23 results were soft but in-line with estimates. Overall revenue/Ebitda/profit after tax growth of 3.2%/2.4%/down 1% YoY respectively, led by 11% growth in the international business and 1% in the domestic business. Company reported domestic volume growth of 3%.
Gross margin expanded 115 basis points YoY to 43.6% but saw a QoQ decline of 140 bps led by higher cost inventories and currency impact in international markets.
Ebitda margin declined 20 bps to 17.3% due to increased operating costs and advertising and promotion spends. Key takeaways:
Marico expects to deliver mid-single digit volume growth in H2 FY23 led by a low base on rural growth and benefits of price cuts in Parachute and Saffola; it is lower than earlier expectation of high single digit growth given the weaker-than-expected consumption environment; it continues to target 18-19% margin in FY23, with sustained A&P spends offsetting cost rationalisation initiatives,
despite 3% volume and 11% value decline, Parachute gained 20 bps in market share, and is expected to see positive volume in H2 FY23.
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