Marico Expects Growth Momentum Despite Monsoon Concerns

Marico Ltd is closely monitoring rural consumption trends in regions affected by deficient monsoon rainfall and persistent inflation, even as the company expects its volume growth momentum to continue in the December quarter. Managing Director and Chief Executive Officer Saugata Gupta said the company remains cautious about possible changes in consumer spending, particularly in areas that have received inadequate rainfall.

In an interview with Moneycontrol on November 3, Gupta said Marico is keeping a close watch on two factors: continued inflation and potential changes in demand patterns in regions affected by uneven rainfall.

The company has not observed visible signs of distress among rural dealers ahead of the festive season. However, it remains alert to the possibility that inflation and deficient rainfall could affect household consumption.

Marico Monitors Rural Demand Amid Monsoon Concerns

Despite concerns about uneven rainfall across parts of the country, Marico has not reported visible signs of weakening demand among its rural dealers. The company is nevertheless monitoring consumption trends to assess whether weather conditions and inflation could influence spending patterns.

Gupta said the company’s outlook is to maintain its current growth run rate, based on the visibility it has regarding consumption and its cost structure for the remaining part of the financial year.

His comments come as September-quarter results from major fast-moving consumer goods (FMCG) companies indicate continued consumption resilience despite inflationary pressures and uneven monsoon conditions.

HUL and Godrej Consumer Products Report Resilient Demand

Recent results from other major FMCG companies have also pointed to steady demand across consumer categories.

Hindustan Unilever (HUL) reported underlying volume growth of 7% in the September quarter, while underlying sales growth reached 15%, its highest level in 14 quarters. The company recorded revenue of Rs 18,071 crore, and its EBITDA increased 8% to Rs 4,089 crore.

HUL has maintained that rural demand remains resilient despite macroeconomic pressures, including inflation and the effects of uneven rainfall on crops. The company has identified higher Minimum Support Prices (MSP) and government welfare programmes, including MGNREGA, as factors supporting rural consumption.

Godrej Consumer Products also reported healthy volume growth despite subdued monsoon conditions. Its consolidated sales increased 19% year-on-year, supported by underlying volume growth of 8%. In India, the company recorded 7% underlying volume growth and 13% sales growth.

Godrej Consumer Products said its household insecticides business gained market share despite a weak monsoon associated with intensifying El Niño conditions.

Marico Records 10% Volume Growth in September Quarter

Marico reported 10% volume growth in the September quarter, supported by easing copra prices and healthy consumer demand. Its consolidated revenue increased 13% year-on-year to Rs 3,897 crore, while net profit rose 31% to Rs 550 crore.

The company’s key product categories delivered strong growth during the quarter. Parachute coconut oil volumes increased 13%, while value-added hair oils registered growth of 21%. Marico’s foods portfolio expanded 45% during the same period.

The performance highlights growth across several of the company’s established product categories as well as its newer business segments.

Marico Increases Advertising and Promotion Spending

Marico stepped up investments in its growth businesses during the September quarter, increasing advertising and promotion (A&P) expenditure by 44%.

The additional spending was directed towards expanding its digital food brands, almond oil and shampoo businesses. Marico has identified these segments as important opportunities for future growth.

However, Gupta indicated that the pace of advertising expenditure growth is expected to moderate after the current investment phase. He said A&P spending growth is expected to settle at a level in the teens next year, broadly in line with the company’s revenue growth aspirations.

Marico Expects Growth Momentum to Continue in December Quarter

Despite its concerns about deficient rainfall and inflation, Marico expects to sustain its current volume growth momentum in the December quarter. The company’s outlook is supported by its assessment of consumption trends and its cost structure for the balance of the financial year.

However, the impact of uneven rainfall and inflation on rural purchasing patterns remains an important factor to monitor. The company’s ability to maintain its growth run rate will depend partly on how consumer demand evolves in regions facing these pressures.

For now, Marico’s September-quarter performance and management’s outlook point to continued growth ambitions, alongside a cautious approach towards potential changes in rural consumption.