#Marico clearing its ways to optimize costs and focus on margins!
@SumitResearch @unseenvalue @datta_arvind @Panks_Arora @AvinashGoraksha
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@SumitResearch @unseenvalue @datta_arvind @Panks_Arora @AvinashGoraksha
🧵
1/ What happened?
-The company is eyeing cost savings to the tune of ₹150 crore as it partly absorbs the price increase in key raw materials like copra, sunflower and rice bran.
-The company is eyeing cost savings to the tune of ₹150 crore as it partly absorbs the price increase in key raw materials like copra, sunflower and rice bran.
2/ How will it do?
-It has cut back on over 100 stock keeping units (SKUs).
-These SKUs were contributing nearly only 1% of turnover and hence it made no sense to continue with such a long tail.
-It has cut back on over 100 stock keeping units (SKUs).
-These SKUs were contributing nearly only 1% of turnover and hence it made no sense to continue with such a long tail.
3/ Proceeds Deployment
-It will be deployed towards advertisement and promotion, investments in new focus categories like immunity, healthy foods, in-between meal snacking and so on.
-Advertising spends for #Marico are already at preCovid
levels, at 9.5% of turnover.
-It will be deployed towards advertisement and promotion, investments in new focus categories like immunity, healthy foods, in-between meal snacking and so on.
-Advertising spends for #Marico are already at preCovid
levels, at 9.5% of turnover.
4/ Price Hikes
-Cumulative price rise in rice bran has been more than 25% over the last few months. However, in comparison,
price hikes in #Saffola edible oil were made only in Q3 to the tune of 78%.
-Cumulative price rise in rice bran has been more than 25% over the last few months. However, in comparison,
price hikes in #Saffola edible oil were made only in Q3 to the tune of 78%.
-Another price hike could be looked at, if raw material prices continue to move upwards.
-However hey will absorb the majority of the raw material price hikes.
-However hey will absorb the majority of the raw material price hikes.
5/ Guidance
-These transient cost pressures should ease out over the coming quarters.
-EBITDA margins are expected at 20% levels for the fiscal, one of its best in recent times.
-Second half of fiscal should see growth at ~10% in volume terms provided pandemic does not worsen.
-These transient cost pressures should ease out over the coming quarters.
-EBITDA margins are expected at 20% levels for the fiscal, one of its best in recent times.
-Second half of fiscal should see growth at ~10% in volume terms provided pandemic does not worsen.
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