Marico Limited is one of India's leading consumer products companies operating in the beauty and wellness space.

Currently present in 25 countries across emerging markets of Asia and Africa, Marico has nurtured multiple brands in the categories of hair care, skin care, edible oils, health foods, male grooming, and fabric care.

Marico's India business markets household brands such as Parachute, Parachute Advansed, Saffola, Hair & Care, Nihar, Nihar Naturals, Livon, Set Wet, Mediker and Revive among others that add value to the life of 1 in every 3 Indians.

The International business offers unique brands such as Parachute, HairCode, Fiancée, Caivil, Hercules, Black Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat that are localized to fulfill the lifestyle needs of international consumers.

December 2018 results

For the quarter ended December 2018, net sales grew 15% to Rs 1860.97 crore.

OPM improved 20 basis points to 18.8% which saw OP growth at 16% to Rs 348.94 crore.

Other income increased 19% to Rs 21.57 crore and interest cost increased 23% to Rs 4.79 crore. As Depreciation went up 6% to Rs 22.58 crore, PBT increased 17% to Rs 343.14 crore.

Tax grew 29% to Rs 91.44 crore after which.net profit grew 13% to Rs 251.70 crore.

Nine months results

For the nine months, net sales grew 18% to Rs 5724.58 crore.

OPM fell 90 basis points to 17.4% which saw OP growth at 13% to Rs 997.90 crore.

Other income increased 21% to Rs 74.79 crore and interest cost increased 45% to Rs 15.75 crore. As Depreciation went up 2% to Rs 67.41 crore, PBT increased 14% to Rs 989.53 crore.

Tax grew 16% to Rs 260.37 crore after which.net profit grew 13% to Rs 730.09 crore.

Outlook

Demand conditions in rural continued to trend favourably, while the Modern Trade and E-Commerce channels led the growth in urban.

The visible focus on the rural economy in the Interim Budget 2019 augurs well for consumption trends.

Easing of input costs and operating leverage benefits are expected to aid margins in March 2019 quarter.

The company will continue to drive sustained profitable volume-led growth over the medium term, through its focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass.

The company will continue to focus on a balanced approach towards volume growth and profitable margins.

In the medium term, the company would be comfortable at 20% plus EBITDA margin in India business.

In coconut oil business it expects to deliver 5-7% volume CAGR over the medium term.

Being the market leader in Serums with a volume share of around 76%, the company continues to focus on innovations and consumer engagement to drive category growth.

The company derives comfort and confidence from the pricing power that its brands enjoy.

The company would continue to exercise a bias for franchise expansion as long as margins remain within a band and do not fall below a threshold at the overall business level.

While exports to new geographies like Sri Lanka, Nepal, Bhutan, had a flattish quarter in constant currency terms, the company remains positive on the future prospects of this business.

In international business it expects to clock an organic broad-based double-digit constant currency growth in the near to medium term.

In international business it aims to maintain the guidance of 16-17% operating margins over the medium term with an upward bias.

Overall for the company, the management aims for a volume growth of 8-10% and a topline growth of 13-15% (depending on inflation) over the medium term.

Overall for the company OPM is expected to be maintained around 18% over the medium term.

Valuation

The stock trades at Rs 364

Marico: Consolidated results