A six per cent volume expansion and a 25 per cent consolidated sales growth for the April-June 2014 period have put Marico back into the market’s good books.

Also piquing market interest is Marico’s target of doubling sales over the next four years. This it plans to do by focusing on its strengths in hair care and skin care, and pushing its presence in the growth markets of Africa and Asia.

Marico’s stock price rocketed 13.7 per cent in early trade, though it has since cooled off – the stock is now up 5.9 per cent over yesterday’s close.

Bounce back

Copra, Marico’s biggest input, began to turn pricey from mid-2013 onwards. Product price hikes in Parachute, which accounts for almost a fourth of Maricos’ revenues, averaged about 13-14 per cent (sequentially) in the September and December 2013 quarters.

Sales volumes nosedive

The September and December 2013 quarters had a volume growth of 1 to 2 per cent. With copra prices showing no signs of slowing down – prices are up 65 per cent since September last year – further price hikes were undertaken, averaging 19 per cent.

But Parachute’s sheer brand strength had consumers gradually adjust to the price hikes, with the March and June 2014 quarters seeing sales volumes up 10 and 6 per cent, respectively. Parachute’s sales for June 2014 were up 41 per cent.

Value-added hair oils such as Parachute Advanced, Hair & Care, and so on, clocked strong growth in volume and value as well. Volumes were up 11 per cent in the recent June quarter, a marked improvement from the single-digit growth of the earlier quarters.

This good growth, coupled with steady revenues from the Saffola stable, cemented the recovery in domestic FMCG sales for Marico. For April-June 2014, the revenues were up 28 per cent over the same period last year. The preceding March quarter had sales expanding 16 per cent.

Consolidated operating margins stood at 16.6 per cent for the June 2014 quarter, the same level as in the year ago. Net profits were up 19.3 per cent.

Global footprint

Marico also made market share gains in hair creams in Egpyt, where it is the market leader, and hair oils in Bangladesh.

The company’s aim of doubling sales in four years is also not over ambitious. For one, this is set to be achieved by focusing on Marico’s strengths – hair care, skin care and, in domestic markets, oats and oils. Marico is already either the leader or the second position in most of these categories.

Two, the company will push its presence in emerging markets, again in categories where it has the expertise and market share. It is also present in relatively niche areas such as ethnic hair care in its African market.

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