# 1. Financial Performance ## A. Key Figures * **A&P Spend:** **25%** increase consolidated · **20%** decrease in India (lowest in 20 quarters) ## B. Revenue Growth * **Multi-Year Momentum:** India and overseas revenue, along with India volume, reached multi-year highs, driven by pricing and volume strength amid sharp commodity inflation. * **Fiscal Year Start:** Encouraging start to FY26 with robust growth across geographies, signaling strong underlying demand momentum. ## C. Profitability Trends * **Regional Diversification:** MENA operating margins improved significantly, reducing reliance on Bangladesh for profit contribution. * **Capital Efficiency:** South Africa delivering sector-beating returns with minimal investment, reflecting frugal and effective capital allocation. * **Strategic Supply Rationalization:** Deliberate exit from low-margin channel-SKU combinations protected profitability despite short-term volume impact. ## D. Margin Resilience * **Margin Protection:** Consolidated margins held firm despite unprecedented input cost pressures, supported by high-margin segment growth and digital margin gains. * **Temporary Margin Pressure:** Optical margin suppression expected this year due to pricing-led denominator effect, but viewed as transitory amid inflation peak. * **Historical Pattern in Play:** Management expects FY27 margin expansion to follow current compression, consistent with prior cycles. ## E. Cash Flow & ROCE * **Non-Media Cost Discipline:** Reduced non-media spends via lower Nielsen frequency, deferred film shoots, and reduced celebrity costs. --- # 2. Volume & Pricing Trends ## A. Key Figures * **India Volume Growth:** **~10%** sequential uptick (near double-digits) · **+1%** ml-age adjusted Q1 growth * **Portfolio Growth:** **>25%** volume growth in non-core portfolio (ex-Parachute, Saffola, VAHO) * **International Growth:** **High-teen** constant currency growth · **42% CCG** in MENA region ## B. India Volume Dynamics * **Broad-Based Recovery:** Underlying demand improving across urban and rural markets, with core portfolios showing gradual rebound and new businesses accelerating growth. * **Premiumization Trend:** Premium categories outpacing mass segments, reflecting sustained brand equity and consumer willingness to pay in resilient segments. * **Volume Resilience:** No significant shift to alternative oils observed despite value sensitivity; stable volumes suggest market share gains and effective retention. ## C. Pricing Strategy & Discipline * **Targeted Price Actions:** Recent Parachute hike fully implemented with no further increases planned; value growth expected to peak in Q2 before moderating in H2. * **Data-Driven Discipline:** Pricing calibrated using 15-year historical models to balance volume and margin, avoiding margin greed and maintaining long-term brand health. * **No BTL-Driven Volume Buying:** Company refrains from aggressive discounts, affirming brand strength and rejecting short-term offtake boosts via promotional spend. ## D. International Volume Performance * **Strong Regional Momentum:** Bangladesh and MENA drive high-teen international growth, supported by NPD success, portfolio expansion, and market share gains. * **MENA Scale-Up Accelerating:** Full rollout of VAHO and personal care lines in Egypt and Gulf, backed by aggressive distribution and investment, fuels 42% CCG. * **Vietnam Recovery Expected:** Temporary softness addressed via strategic interventions, with turnaround plans underway. ## E. Offtake & Market Share Trends * **Healthy Offtake Momentum:** Encouraging trends across segments, with market share held or expanded and **over 80%** of business showing stable or improving penetration. * **ATL Over BTL Focus:** Company rejects hypothesis that higher BTL spend drives consumption; brand building prioritized over trade incentives. --- # 3. Channel & Distribution ## A. General Trade Recovery * **Headline:** General Trade returns to growth after prolonged weakness, driven by focused distribution reinvention and improved partner ROIs amid favorable inflation dynamics. * **Headline:** Revival supported by **Project SETU** and enhanced execution, with structural improvements in direct distribution boosting channel productivity. ## B. Project SETU Impact * **Headline:** Project SETU emerging as key growth catalyst in rural and mid-premium VAHO segments, with urban scaling expected to accelerate impact in Foods and PPC categories. * **Headline:** Initiative driving **market share gains** via expanded reach to **5 crore incremental outlets**, improved shelf presence, and stronger distribution of second- and third-tier brands. * **Headline:** SETU’s dual rural-urban strategy—focused on **direct distribution digitization** and expansion into specialty channels—is now showing first meaningful growth signals, with broader ramp-up anticipated in H2. --- # 4. Brand & Product Performance ## A. Key Figures * **Parachute Two-Year CAGR:** **5%** (FY17–FY19) after **35% price increase** * **VAHO Value Market Share:** **+140 bps** (MAT basis) * **Foods Portfolio Growth:** **20%** (current quarter) vs. **40%** (Q4 prior) * **Foods Gross Margin Improvement:** **+1,000 bps** over two years * **Saffola Franchise Growth:** **Double-digit** ## B. Parachute: Pricing Power & Volume Resilience * **Exceptional Price Inelasticity:** Parachute absorbed over **60% effective price increases** with minimal volume impact, underpinned by strong consumer trust and brand equity. * **Strategic Volume Management:** Growth maintained despite deliberate rationing of low-margin volumes and ml-age adjustments, prioritizing profitability over top-line inflation. * **Market Share Consolidation:** Gained share in Modern Trade and E-commerce post-pricing transition; positioned for volume recovery as smaller competitors exit. * **Long-Term Resilience Confirmed:** Historical precedent of **5% growth after 35% price hikes** reinforces brand strength and management’s confidence in sustaining volumes. * **Media Spend Discipline:** Reduced non-media and production costs improved efficiency; **media spends in focus categories increased**, countering perception of austerity. ## C. VAHO: Strategic Turnaround & Share Gains * **Sustainable Category Recovery:** VAHO showing mid-single-digit volume growth, driven by urban revival and rural resilience, with acceleration expected. * **Double-Digit Growth in Core Segments:** Excluding Amla, high-margin VAHO brands achieved **double-digit volume growth**, capturing share from organized players. * **Strategic De-Prioritization of Amla:** Shift away from unprofitable BTL-heavy competition at the bottom of the pyramid deemed unsustainable. * **Genuine Market Share Gains:** Growth attributed to **increased share of voice** and brand equity investment, not channel stuffing, with **Hair and Care, Jasmine, Aloe, and Ayurvedic** brands all growing strongly. * **Portfolio Rationalization Success:** “Fewer, bigger, better” SKU strategy enhancing efficiency and brand focus. ## D. Saffola Franchise: Momentum & TAM Expansion * **Core Oil Stabilizing:** Saffola oil returned to **mid-single-digit volume growth**, in line with medium-term targets. * **Double-Digit Franchise Growth:** Driven by **core products (Oats, Masala Oats, Honey)** delivering double-digit growth and rising **share of voice** in premium segments. * **TAM Expansion via Adjacencies:** Clear growth paths for **Saffola, True Elements, and Plix**, with innovation fueling expansion beyond traditional categories. * **Brand Leverage Enhances Efficiency:** Master brand strategy enables **marketing spend amortization**; performance best assessed on **net contribution of the portfolio**. ## E. Foods Portfolio: Scaling with Margin Progress * **High Growth at Scale:** Segment grew **20%** this quarter, moderating from prior-year highs due to base effects, but remains on track for **over 25% growth in FY25**. * **Profitability Inflection:** Oats and Masala Oats nearing company EBITDA levels; breakeven at **₹150–200 Cr**, with significant margin leverage at **₹300–400 Cr** scale. * **Structural Margin Improvement:** Gross margins up **1,000 bps** in two years, with further gains targeted despite low-A&P, low-GP model. * **Net Contribution Focus:** Despite lower gross margins, **net contribution** becomes comparable to company average at scale, validating long-term model. --- # 5. Digital & D2C Business ## A. Key Figures * **Digital Brand ARR:** **₹850 Cr** (exceeded target) · on track for **2.5x FY24 ARR by FY27** * **Beardo Revenue Range:** **₹250–300 Cr** · achieving **double-digit EBITDA margins** ## B. Digital Brand Strategy & Recognition * **High-Growth, Capital-Efficient Model:** Digital-first portfolio is scaling rapidly with strong market validation, including **three brands on the Insurgent Brands List**, underscoring innovation and execution strength. * **Strategic Investor Positioning:** Marico leverages **multi-brand synergies, cost advantages, and operational expertise** to attract and scale digital D2C founders, enhancing ecosystem value. ## C. Margin Trajectory & Operational Leverage * **Break-Even Achieved for Beardo & Plix:** Both brands are on an accelerated path to profitability, driven by **scale synergies, operating leverage, and in-sourced manufacturing**. * **Margin Expansion Pathway:** **Just Herbs** and **True Elements** expected to reach **breakeven soon**, supported by backend integration and absorption of fixed costs at scale. ## D. Cost & Channel Efficiency * **Structural Cost Advantage via "One Marico":** In-sourcing Beardo SKUs delivered **500–600 bps gross margin uplift**, now being replicated across the portfolio. * **Efficient Go-to-Market:** Unified procurement, supply chain, and **scaled digital media buying** yield superior ROAS and **higher AOV**, boosting D2C profitability. --- # 6. Input Cost & Inflation Risks ## A. Key Figures * **Copra Price Change:** **~12%** below peak (-10% to -12% correction) · **+107% YoY** 1Q average * **Coconut Productivity:** **~9% decline** due to weather disruptions * **Profit Lever Dependence:** **~1,000 bps reduction** in reliance on Parachute and Saffola over recent years ## B. Copra Price Volatility * **Supply Shock Drivers:** Sharp copra inflation driven by **weather-induced supply constraints**, including unseasonal rains and temperature swings, which disrupted drying and delayed conversion cycles. * **Market Imbalance:** Supply-demand gap exacerbated by **inelastic demand** (consumption + religious use) and **speculative trading**, though demand rationing is now emerging as a moderating force. * **Stabilization Underway:** Prices have corrected meaningfully from peaks, with **stabilization beginning** and normalization expected over the fiscal year, supported by improved monsoon forecasts. * **Competitive Advantage:** Marico’s scale, inventory management, and backend capabilities have ensured stable operations, while **local competitors retreated during peak inflation**, enabling market share gains. * **Reduced Vulnerability:** Structural margin expansion initiatives and growth in premium/mid-tier VAHO and international businesses have **significantly lowered exposure** to copra volatility. ## C. Supply Chain Stability * **Enhanced Control:** Marico has strengthened supply chain resilience, ensuring supply assurance through the season (extending to September) despite inflationary pressures. * **No Further Inflation Expected:** Current positioning and visibility suggest **near-term price stability**, with no anticipated further cost escalation. ## D. Commodity Cost Outlook * **Elevated but Peaking:** Copra costs to remain above initial plan for full year, but **sequential declines expected** in absence of shocks, with deflationary phase likely post-peak. * **Crop Recovery Signal:** Initial outlook for upcoming crop is decent, and **no major pest threats** are visible, supporting recovery trajectory. ## E. Pricing Power * **Pricing Discipline Maintained:** Despite cost fluctuations, **no further price adjustments planned** following recent copra correction, reflecting confidence in current positioning and broad-based prior adjustments. * **Demand Resilience:** Lockdown-era shifts boosted CPG spending, but management cautions against complacency, noting **artificial inflation of wallet share** during that period. --- # 7. Guidance & Outlook ## A. Key Figures * **Revenue Target:** **~25%** growth expected this year · **₹15,000 Cr** within 2 years · **₹20,000 Cr by FY27** * **Profit Growth:** **High single-digit** targeted for year · **Double-digit CAGR** expected over next two years ## B. Revenue Strategy & Momentum * **Aggressive Scaling:** Management projects mid-teens annual growth to double revenue by 2030, driven by organic expansion and selective M&A. * **India Volume Goals:** Targeting high single-digit volume growth nationally, with potential for double-digit in select quarters amid strong pricing power. * **Digital & D2C Push:** Four core digital brands form the base for ₹2,000 Cr ambition; acquisitions remain an option to accelerate TAM expansion. * **Confidence in Flywheel:** Favorable macro trends, shifting consumer behavior, and brand resilience support sustained top-line momentum. ## C. Profitability & Margin Outlook * **Profit Growth Reset:** Double-digit EBITDA growth now unlikely this year; focus shifts to high single-digit, with recovery expected in H2 and acceleration beyond. * **Margin Flexibility:** Management refrains from margin guidance due to revenue acceleration and denominator effect in inflationary environment. * **Breakeven Path:** Just Herbs and True Elements expected to reach profitability within 18 months, with moderate growth prioritized over scale. ## D. Segment & International Growth * **International Resilience:** MENA NPDs driving >30% growth; South Africa seen as temporary setback with recovery signs in July and full-year double-digit target intact. * **M&A Active Pipeline:** Focus on international expansion and adjacent categories in India, leveraging proven acquisition playbook for inorganic growth. * **Competitive Advantage:** Smaller players under strain and irrational pricing by large peers expected to subside, enabling share gains and volume stability. * **VAHO & Foods Strength:** VAHO restoration to double-digit growth remains key; Foods maintains 25%+ trajectory despite volatility in D2C segments.