Marico Limited (MARICO) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good team, and welcome to the Merico Ltd's Q4FI26 Earnings Conference Call. We have a task to teach the Senior Management Team of Merico Ltd, Mr. Saugatha Gupta, M.T. and CEO, and Mr. Pavan Agarwal, Group CFO and CEO, International Business. As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Before we get started, I would like to remind you that the Q&A session is only for the institutional investors and analysts. And therefore, if there is anybody else who is not an institutional investor or analyst, but would like to ask questions, please directly reach out to the Merico Investors Relation Team. I now hand the conference over to Mr. Saugatha Gupta. Thank you, and over to you, sir.

Yeah, hi, everyone, and good evening to all those who have joined the call. With FY26 having concluded, I will begin with a brief overview of the operating environment, after which I will take you through our performance and strategic priorities going forward. During the quarter, demand sentiment remained broadly stable, supported by benign inflation, improving rural sentiment, and favorable policy stimulus. These are further aided by the enhanced affordability following the GST rate rationalization implemented during the financial year. We are optimistic of a gradual improvement in consumption trends in the quarter ahead, supported by these factors. However, the onset and progression of monsoon, as well as the inflationary impact of the West Asian crisis, will remain a key monitorable. I will now move to our performance. FI 26 marked a year of strong execution in a tough and operating environment. Volume growth in India business, international business constant currency growth, and consolidated revenue of Marico reached multi-year highs. The India business continues improving volume growth trajectory during the quarter. Off-takes remain robust with more than 95% of the portfolio gaining or sustaining market share and over 90% maintaining or improving penetration on a mad basis. Investments under Project Setu are yielding visible results, particularly in rural reach and execution quality, supporting the revival and sustained growth of general trade this year. In parallel, alternate channels, including organized retail, e-commerce, and big commerce, continue to scale strongly, driving differential growth in urban and premium portfolios. Delving deep into our key categories, Parachute continued to demonstrate strong resilience during the quarter and delivered low single-digit volume growth after adjusting for MLH adjustments. With Copra prices having corrected to about 35% from peak levels and expected to remain wage-bound from here on, we have passed on the benefits to consumers to some selective pricing actions. As pricing stabilizes, we expect a recovery in consumption with a pickup in volume growth, which will be evidently visible from Q1 FY27 itself. Our strengthened distribution and robust backend and supply chain capabilities position us well as compared to the smallest players in current situation, while the brand has continued to strengthen its leadership position during the year. Valued Air Royals delivered robust growth in this quarter led by volume growth in the low 20s and meaningful market share gains. The portfolio grew 20% this year, backed by strong momentum in the mid and premium segments, which is a non-Shanthi Amla portfolio. These high-margin segments have delivered close to double-digit volume growth on a two-year CAGR basis. We have also entered the Armand Doyle category under the hair and hair franchise, and we have made considerable inroads in modern trade already. We expect VAHO to sustain its double-digit volume-led growth trajectory, supported by a focused innovation pipeline, improved availability following GST rationalization, and distribution expansion under project staples. Sofola Edible Oils deliver steady performance in an elevated pricing environment. As we enter FY27, we expect stable growth while maintaining our focus on the threshold levels of profitability. We will remain disciplined in passing on necessary input cost movements through calibrated pricing actions while continuing to drive premiumization and pushing for higher growth in cold-pressed oils, Sofola Gold, and Total Variants. Food transitioned to a mid-team growth on the back of double-digit growth in core Sofola Foods in Q4. The foods portfolio exited the year at 1,000 plus scores in revenue. We now have a wholesome play in foods with our portfolio spanning from mainstream health and wellness with Sofola Clean Label and Modern Breakfast and snacking with True Elements, premium gourmet snacking with 4700 BC and functional nutrition with Cosmix and Plix. You must note that this growth is being delivered alongside a significant improvement in profitability. Our focus remains on building fewer, bigger, and more profitable plays while driving category development through innovation and strong execution. In premium personal care, we continue to scale with a clear focus on profitable growth. The portfolio comprising serums, male grooming, and skin care exited the year at an ARR of INR 350 plus growth. The digital-first portfolio of premium personal care exited FY26 at 1,100 crores plus ARR. The scale-up of this portfolio has been accompanied by a structural improvement in profitability, and we aim to exit FY27 at a double-digit EBITDA margin and eventually teams EBITDA margins in FY30. We are doing an accelerated growth trajectory with improving profitability. Our digital transformation continues to accelerate with 55% of Maricor core spends, advertising spends, now directed towards digital media. Of course, 100% of the digital, I mean, it's 100% spends in the digital brands. Consequently, the combined revenue share of foods and premium personal care, including digital first brands in the India business, moved up to 23% this year, despite the sharp pricing-led growth in the core portfolio. We expect the share of these new businesses to expand to about 27%, which was earlier targeted to reach 25% in FY27, and aspire to move about one-third of our business by FY30. Moving to the international business, we delivered robust growth this year, supported by broad-based performance across markets and portfolio diversification. Bangladesh maintained its strong momentum. While Vietnam, South Africa and the export markets continue scaling up as Cree growth engines trend the resilience of the portfolio. In MENA, performance in the Gulf region during the quarter was impacted by near-term supply-side constraints in March, while Egypt continued to deliver strong growth. We continue to monitor the impact conferred in some markets of the Middle East, which contributes, as in the Middle East region, to only 4% of our total turnover, but we see no immediate major concern. We are also making steady progress in premiumizing our portfolio across markets, driven by expansion into beauty and personal care categories and supported by innovation. This is expected to drive both differential growth and margin expansion over the medium term. Our ongoing diversification and premiumization effort across India and international business markets are already reshaping our growth construct in a meaningful way. By FY30, we expect to have substantially transformed the portfolio, resulting in lowering the share of commodity-linked businesses from more than 70% to 50% over a decade. To sum up, we have delivered on our aspirations across key performance parameters while navigating a highly volatile input cost environment and strengthening the underlying growth drivers of the business. More notably, we have delivered double-digit profit growth despite facing unprecedented inflation and key inputs. This performance reflects the resilience and pricing power of our core categories, profitable scale-up of our new businesses, and the strength of our operating model anchored in supply chain agility, cost discipline, and the results of ramping up of investments in future-ready capabilities. Despite ongoing geopolitical tensions, we have maintained strong supply chain assurance through strategic positioning across raw materials, packaging materials, and finished goods and do not foresee any material disruption in the near term. Further, we believe that our supply chain and back-end advantages will act as a competitive advantage over smaller players and drive superior volume growth and market share gains from these players during the next few quarters. We remain focused on consistently driving competitive top quartile outcomes in the near term. We expect to sustain high single-digit volume growth in the India business in FY27. The interactive businesses expect to maintain strong momentum and mid-teen constant currency growth, driven by broad-based performance across markets. At a consolidated level, we aim to deliver double-digit revenue growth to cross 15,000 crores in revenues and high-teen EBITDA growth, subject to stable macros. On the cost front, we are witnessing divergence in input trends. While copra prices have corrected meaningfully declining by approximately 35% from peak levels, vegetable oils and other crude linked inputs continue to exhibit an upward bias driven by ongoing geopolitical tensions in the Middle East. While we benefit from tailwinds and COPRA, we will mitigate cost pressures through calibrated pricing actions and cost management initiatives. So far, the weighted average input cost increased next year. Therefore, extremely marginally, we have already implemented price heights, which will utilize the impact. Over the medium term, our strategy remains anchored in driving profitable growth through expansion of the total addressable market, sharper portfolio choices, accelerated premiumization, and continued investments in digital media analytics automation and AI capabilities. This calibrated yet ambitious approach to growth, underpinned by strong execution capabilities and disciplined capital allocation, gives us the confidence and our ability to deliver consistent, sustainable, and profitable growth over the medium term. We will aim to maintain our current track record of top quartile volume growth in India and teens' constant currency growth in international business. At a consolidated level, we will aim to sustain double-digit revenue growth to comfortably cross 20,000 crores in revenues and aspire for mid-teen EBITDA growth by FY30. Our growth trajectory reflects both ambition and execution, scaling from 10,000 trores to 15,000 trores in just two years, and adding another 5,000 trores plus. By FY30. With a transformed portfolio as we continue to build fewer, bigger, bolder, and faster place, a resilient operating model, and a disciplined capital allocation, we believe we are well positioned to deliver this sustained profitable growth at scale as we cross our journey into 2030. With that, I conclude my remarks. Thank you, and we can now take some questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and then 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants, you are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all the participants, you may press star and then 1 to ask a question. We have the first question from the line of Avneesh Roy from Nuama Wealth. Please go ahead.

Yeah, congrats. I have three questions. First is on international business. Two sub parts to it. One is Bangladesh. There is a sharp acceleration of sales growth to 35% versus full year growth of 25%. So any one-off here, was there some delayed pricing which is benefiting now or was it a soft base? And even now, in FI27, entire year, a democratically elected government is there versus a very fragile government in most part of FI26 in Bangladesh. What will be the outlook? Second subpart to the international piece is MENA obviously in March month was challenging for all FMCG companies which were having business there. In April month, are there alternate channels from which maybe the business has seen some improvements? So if you could update on April, I understand March there was a sharp decline or maybe no business for most companies. How has April been?

So, I think coming to Bangladesh, we have been extremely steady. Now, sometimes, you know, there are quarterly, this one, and obviously, there are some pricing which has been taken into account. But I think overall, as I said, I think as long as we continue to deliver, you know, obviously, Bangladesh has been a critical component and has continued to demand resilient and therefore annualized double-digit growth, we are happy. We believe that we have been resilient in Bangladesh and continue to diversify and deliver consistent growth in Bangladesh, and we will continue to invest behind brands, diversify, and we are pretty confident about delivering this number. Coming to Meena, March, obviously, there were issues on shipment. There was some visibility. See, there's a difference between impact on offtake and impact on the primary sale, because primary sale is a function of some of the shipment. There are alternative routes. We just don't feed Meena from India. Some of the stuff goes to Egypt. There are alternative routes Thank you very much. I think what I alluded to in the call is that broadly the impact is less, and we will wait and see how the situation unfolds. But I think in terms of uptake, we have no reason to have significant concern.

Understood. My second question is on some of the recent acquisitions. So if you could give us some update on 4700 BC and some of the other ones in India and Vietnam, etc. What is the initial scale-up in distribution, any initial shock? Because in M&A, generally we see in India especially, everything looks quite positive initially, but when actual business comes up in the first year, there are a few challenges, either inventory build-up or, say, Any other challenge, so any learnings you can share on any of the recent acquisitions.

So, firstly, those challenges happen when there is a 100% sale happens, you know. We now have a playbook. Of ensuring how the integration happens, how we do the valuation, what are the things we look into. I think it has been a positive start. We are, I think, extremely privileged to have most. And one of the things we do is we ensure that we partner with fantastic set of founders. In all the cases, they're unique set of brands. And therefore, we have had positive starts, no hiccups. And I think the one big change that has happened now that we have a house of brands, we are seeing the impact of synergy, at least in the back end, which benefits long term profitability, long term traction, or even, for example, if you know that, you know, like in a brand like a popcorn and 4700, we see a price point that can be taken over by GT. We have actually started immediate synergies on modern trade. So it started off very, very, very well. And as I said, we don't acquire or buy stake in places where we believe that the business is fundamentally weak or unit economics is not there. So far, our success rate on that front has been fairly okay.

Understood. The last quick question. So I think you are one of the unique companies from a FI27 perspective, where key raw metal is deflationary. I think for most other companies, nearly there is a sharp inflation. But if I see your raw metal construct, out of four, three are quite inflationary. The big one is deflationary. So if you could tell us as a basket, how things stand? I do understand things are volatile on a daily basis. But some sense if you can give as a basket, how much is it up now? Second is you did say some corrective action. So is there a MRP cut also or is it just select the grammage intervention, select promotions being changed, etc. in parachute? And one final question here. So can you cross subsidize your inflationary part of the portfolio? Because if bulk of the portfolio is reflationary, can you cross subsidize your foods and personal care by this, which can give you market share gains also.

So I think from a pricing perspective, what we've done is since we have seen that corporate prices have come down the plus or 35% from the peak, we have taken, you know, price cuts in non-price point in small packs to the extent of about 10% or so. We haven't really taken any call in terms of increasing the mileage, but as of now, that's the call that we've taken. Now, on your question of cross-subsidizing, we always take a portfolio approach. Of course, we have to keep in mind in terms of what are the expectations from a profit delivery standpoint. And of course, we'll keep calibrating those calls and take a portfolio approach in terms of when we take the calls on pricing, etc. Now coming to a margin for next year, of course, there are a lot of moving parts. As you rightly said, yes, we have a tailwind in terms of Cobra prices where we have some gains coming in as compared to from the high base of last year. But because the crude where it is at this point in time and where it will move, we don't know. But still, if you look at our guidance, what we've given is that if situations were normalized, we would target to deliver about High-team's addictive growth, which in fact is slightly higher than what we had guided in the previous call, but this definitely assumes that situation should normalize soon, but if it doesn't really sort of, then it's difficult to sort of tell where exactly we will be.

And just to add, I think, to what Pawan said that, see, normally, whenever there is parachute deflation, I think we now have, you know, in terms of our overall proactiveness in managing deflation is much better. But having said that, this is a unique year where we believe that given the supply chain constraints and other challenges, the smaller players will face. I think this is advantageous for us. So, therefore, instead of cross-subsidizing, there is, itself, we have a, you know, we have a kind of a competitive advantage this year if this, you know, supply situation and all these constraints continue.

And on the RM basket, any sense? Some of the companies have said...

Sorry to interrupt in between, Abneesh. I would request you to finally rejoin the queue again for more questions. No problem.

Thank you.

Thank you. We will take the next question from the line of Mihir Shah from Nomura. Please go ahead.

Hi, sir. Thank you for taking my question, and congrats on a very good performance.

Thank you.

Wanted to just understand on your rationale behind the upward revision on the EBITDA guidance, as this is despite the new acquisitions, which could have some drag on the margins, plus the inflation in crude derivatives that we are seeing currently is very sharp. Believe in 3Q, as Pavan highlighted, you know, you had highlighted about mid-teens, EBITDA groups, and now it's been high-teens. So what is driving the change in assumptions? Would appreciate some thoughts on those.

So I think two things. I think, firstly, just to give a perspective, two of the three acquisitions, for example, Cosmix and Skinetech are profitable. As you know, Skinetech is in the mid-20s. Cosmix is in the high teens. So, therefore, actually these acquisitions, and number two, of course, there's a significant, as we talked about, in PIX, which is a large part of the digital business, which is also experiencing an upward trajectory in operating margins. Okay, so now coming to, I think, So this is, now we have a firmer view of COPRA, which is now going to be range bound for the rest of the year. And we have a stress test version of what crude B, of course, is very difficult to predict. But our current estimates suggest, and obviously we have taken some pricing action in that part of the portfolio, where there is an impact on input cost, which we have taken immediately when this, you know, this issue happened in March. So therefore, and therefore, we have a firmer view of, and therefore, this is a best case of view, given the current situation that this should be around mid-teens. And obviously, as I said, that there has been far better also visibility of what the digital business profitability improvement agenda is and what we can achieve. And as I said, the one more thing which we have done is, as now that we have a, what I call a basket of brands or Portfolio, branding, digital, and with all synergies coming in, I think we have been able to realize better gains in terms of input costs and procurement and other cost drivers. Secondly, I believe that one of the significant competitive advantage or a capability which we have honed over the last four years is ability to handle adversity. And this started during COVID. We faced Ukraine where there was input costs. We had our own unique adversity in terms of 100% increase in Cupra prices. So we manage this situation far more proactively in terms of supply chain assurance and other things. So, I think a combination of all that where, given the current situation, there's a best-case visibility which suggests that we should be able to deliver a high team. When I talked about in Jan, obviously, we now have much more firmer data and visibility of that.

Got it, sir. Thank you. That's very clear. Secondly, on Sofola, both the volumes and pricing has seen some improvement on a sequential basis, and even actually in the press not highlighted that there were some pantries stocking up in the early part of March due to the West Asia crisis. So, I wanted to check just one, the level of pricing that would be required on Sofola to maintain margins, two, any pantry stocking up, and what can be the sustainable volume levels for Sofola for Fi27.

See, I think, as I said, we have made it clear in Sofola, we are okay to have a low to mid single digit volume growth subject to a threshold level of margin. So, wherever there has been an input cost increase, we will pass it on and we have done already. Now, coming to the other important thing we are doing is we are focusing on Sofola, gold, total, and cold press oil, which is the higher margin portfolio and higher realization portfolio. So, there is no change, and obviously, given the volatility, volume and value growth could fluctuate, you know, quarter to quarter, as long as annualized, that is the, you know, kind of an aspiration.

Understood. And just one last clarification on WAHO. Did I hear you correctly when you said there was 20% volume growth in WAHO? And wanted to understand, is there any anaesthetizing or pricing should one expect during the, you know, first half of FI27 in WAHO, which could...

There would be some pricing, yes. There would be some pricing, yeah.

So we already have taken about 6-7%. Price increase in response to whatever increase we have seen in crude lead derivatives, so yeah, so that's the price increase that we've taken.

Okay, thank you, Saugadar.

And with respect to volume growth, what you asked for, yes, in quarter four, it was 20% plus volume growth in the Baha portfolio.

Got it, clear. Thanks, thanks so much, Jens, wishing all the way best.

Thank you. We will take the next question from the line of Abhi Mehta from Macquery. Please go ahead.

Yeah, hi. I just wanted to kind of understand, you know, you pointed about supply chain constraints that are present by the smaller players and especially in, you know, parachute. Could you give us a sense on how is it, where are we, what are the kind of constraints you're facing to better appreciate the competitive advantage that you are kind of leading to?

See, I think it could be, as you know, all polymers, packaging material, it could be fuel in the factory. Now, we don't have such concerns. We have ensured to the best of our ability these things are managed, and also, obviously, ability to foresee. But, you know, like, for example, any smart player would have brought in advance in March, early March, because this issue started off in, you know, February 27th. Obviously, some people had a window of ensuring that you have that supply chain assurance, which gives you both, you know, both the cost advantage and as well as supply chain advantage. So, a smaller player's response times, ability to foresee these would be, you know, lower, and therefore, and also what happens when it's high inflation, they have working capital constraints, they are not able to stop and have, you know, kind of a position build up in these. So, that's the advantage, and we have seen this during COVID, we have seen this highly inflationary times that always that we, so this is a good thing for us because normally in a deflationary environment, They become active. We believe, we have reasons to believe they are no longer active that much, even if there is a deflationary environment in Cobra, because all the other things have neutralized that Cobra impact for them.

So, Salazar, the advantages that we saw, which started, you know, probably towards the start of the conflict, would it be fair that, you know, that competitive landscape is broadly the same? It's not kind of changed materially from there on, despite, you know, government trying to reduce cooking price, availability, etc. So, it's more, it's something that, you know, should sustain or could sustain for some time. Is there a right rate to, is that how I should do it?

Oh, it depends. It depends. Obviously, as I said, that overall, see, the issue is, as I said, that today packaging material, there's inflation and there is some kind of a, you know, not, I won't call it lack of availability, but there is constrained availability. Now, obviously, a small player's ability to cope with that is lower and it is going to continue for some time.

Got it. So it's a mix of inflation plus availability, which is why this time it's going to be, which is what kind of gives us more confidence from the, and hence the upgrade is what you're essentially kind of setting. That's right. Got it. Last bit, I just wanted to kind of get a sense on the foods portfolio. We have now kind of broadly come out of any, when you kind of look at the growth momentum kind of going forward, we are now, it's fair to expect profitability plus a 25% kind of plus growth momentum now is something that we can kind of achieve here or is inflation a concern and hence their growth could take a hit in color over there or in common.

I think let's take it as a 20% of the base case and then we'll see.

Okay. Perfect. That's all for my sake. Thank you very much. Thank you.

Thank you. We will take the next question from the line of Harit Kapoor from Investec. Please go ahead.

Hi, good evening. Just two or three from me. You know, one was in the gross margin side on the standalone entity. You know, given that sequentially, I know you normally see some sequential drops, but given that there hasn't been a sharp improvement sequentially, is it fair to assume that the low-cost base completely starts playing out in quarter one only for Copra? Is that the right way to think about it?

I will start playing out from quarter one, but let me not, you know, get into quarter wise as to what could be the gross margin expansion, and rather I would want to print a picture for the full year, and I believe for full year about 300 to 400 basis points improvement over the exit of FI26 is fairly possible.

Got it, got it. And just one thing on, you know, your sense on this consumption uptick, which it looks like in quarter four, right? You know, you've seen a lot of the companies actually deliver, you know,

numbers which are ahead of third quarter, you know, trajectory. I mean, what would be your kind of, you know, prognosis, thought process, you know, at least on a top-down basis on, you know, what's kind of driving this, you know, at a sector level would be great to hear your comments.

So if you look at the second half of the year, I think two things would have happened. I would say that one, of course, Some of the parts of the sector were lapping a slightly softer base, but more than that, Google had earlier recovered. We started seeing a recovery in urban as a combination of obviously the GST rate rationalization and affordability factor led to, I think, price increases, I mean, the price drops which were taken. See, also what has happened is that if most of the, you know, especially in food now that everything is 5%, that unbranded to branded or unpackaged to So packaged, you know, conversion is going to likely to get accelerated with that. And we are also seeing in value-added heralds, for example, in a large category where there is some unbranded small players, so the gap is actually pretty small. Secondly, I think we continue to enjoy a good period of very low inflation. Low inflation helps in FNCG consumption. Ultimately, people are aspirational. They want to get into aspirational brands. As disposable income increases, and even now as we speak, I think the government has done a fantastic job of containing the kind of shock which... You know, other countries, a lot of emerging markets have faced because of the current crisis. I think we have been insulated, and therefore, we believe that we should, I mean, the sector, and especially the organized part of the sector, because as I said, that they are in a, they have a better coping ability in terms of, you know, handling these kind of adversities. So it looks okay for the sector and definitely looks okay for us because as far as we are concerned, we are inflation neutralized to a large extent.

Great, but just one last bookkeeping was on the tax rate. Any sense on FI 27 on that consolidated level would be helpful?

Yeah, you could consider around 20% or so.

Got it. That's it for me. Thank you. Wish you all the best.

Thank you. Thank you. We will take the next question from the line of Tejas Shah from Evander Spark Institutional Equities. Please go ahead.

Hi. Thanks for the opportunity and congrats on good set of numbers. So, with this one question, we have been navigating macro-headwinds well over the past few quarters, in fact, past few years. And while the government has kind of parallel the last one year or one and a half year is trying to revive consumption, By making a lot of interventions. So as we look ahead next year, our growth confidence is primarily driven by internal execution, or are you beginning to see signs of sustainable consumption recovery at ground level as well?

I think, as I said, in the second half of the year, the sector has started accelerating. Having said that, at the end of the day, we have to ensure that we continue to deliver top quartile performance. We believe that we have multiple vectors of growth, whether the recovery of the core, SETU has significantly given us a distribution reach advantage, the VAHO turnaround, the diversification strategy, the stable businesses international, and the significant profitable growth trajectory of digital. So I think multiple vectors are playing out, and sometimes one or two are not playing, might not play. For example, I mean, we had a short-term issue in Middle East, But I believe if I have eight to ten vectors of growth and they are in a symphony, one or two strings not working, even then we are pretty confident of delivering what we are seeking to achieve.

And lastly, the government's effort, fiscal effort also has been led by state governments also in some cases.

So are you seeing any divergent growth trend in some of those states where, let's say, there is a lot of push to put more money in hands of bottom end of the consumer, or is it very secular as of now?

I think it's a pretty secular. Obviously, it's also for us, it has been a function of where we have got deeper gains because of SETU. Because as you know, in some of the states, our distribution, especially the direct distribution was not indexed, you know, under indexed. And therefore, we are seeing that, obviously, because of our portfolio, especially in food and premium personal care, you know, the metros, but to us, I think one of the things which is unique to us We called it out first before others is that we need to get GT back on track. We started investing behind SETU, invested to say that the general trade contributes so much to the country, creates so much employment, and it's a source of competitive advantage for us because the entry barriers have decreased in OT, but it continues to be in GT. I think our systematic investment and we believe that we owe it into the entire general trade, our distribution partners and everything to increase their viability. So to us, that is a big thing. And therefore, we believe independent of what happens in a state consumption or anything, this will help us to grow and consistently grow.

Very clear. Thanks and all the best for coming quarters.

Thank you. We will take the next question from the line of Arnav Mitra from Goldman Sachs. Please go ahead.

Yeah, sorry, my line was muted. So congratulations on a great year, Shavato and Pavan. My first question was on food. So if I look at the 16% growth, I assume this includes the turnover, past quarter turnover from the new acquisition. So if you could just help me understand how the organic business has done relative to the last couple of quarters and are you seeing an improvement there? And what are the building blocks there for FY27 as you go ahead in the organic business? Thank you very much.

So I think the first good news is that in the quarter, the core, the full of foods has grown in double digits. Now, why overall food growth is still not looking all that good in this quarter is because T is two elements is lapping up the base quarter, which was a high base. And secondly, we've also taken some SQ rationalization call over there for some of the low GC products to accelerate the path of profitability in two elements. However, we definitely expect team growth in two elements in FY27 also. And thirdly, also for PLIX, over the last three, four quarters, PLIX is now more pivoting on more to personal care, and therefore the contribution of PLIX in the food's growth is progressively coming down. So these are the reasons as to why, you know, food's growth, despite inclusion of 4,700 and COSPIX, is at about 16-17%. But as Shagata alluded earlier in the call, that we definitely believe going ahead, it will be in the range of at least 20-25%, if not more.

And it's not the entire quarter of Cosmic Sun. Yeah, just a few days, you know. It's not entire this one. It's around, you know, we started doing it in I think maybe 50 days or something.

Got it, got it. So in that sense, like for next year, when I think you spoke about 20% plus growth in food, you should potentially be able to do a lot more because the organic business also is recovering and you will get a full year plus I assume there will be a ramp up in that business. So just wanted to check whether you think the food's growth can be higher because of the M&A also adding to that 20%.

I think we took as a base case, let's take it as 20 to 25, I think. But we'll see. As I said, I don't think we have any concern as far as food is concerned, at least immediately, and we will see the results coming from quarter one. That's all I can say.

Got it. My second question actually was I just wanted to go back to the Bangladesh performance because last two quarters there has been a very strong acceleration from 22, 29, and 35 growth rate. So just wanted to understand is the pricing cycle on coconut oil there going different from India in the sense that is Bangladesh also likely to see a deflation now on pricing or the price trends there are different and therefore the inflation-led growth could continue in the coconut oil business. So if you could just help understand a little bit on how this last two quarters has accelerated and next we should think this will desyldate immediately or it's a gradual go back to that mid-game kind of a growth that they've historically had.

I think we shouldn't reach too much into these quarterly frames. On a steady state basis, we expect definitely to deliver double-digit growth in Bangladesh. Specifically talking about the last couple of quarters, I believe it's a combination of good performance of both core and the newer portfolio comprising shampoo, maybe, etc. And I think it's also driven by a decent volume growth. So therefore, going ahead, I think, from a guidance standpoint, we would say that at least double-digit growth is for sure going to be delivered. And I think one other thing which we are being watchful is about as to, you know, what happens on the consumption side, depending on the inflation, etc. But over there also, I believe that the robust business foundation and strong more that we've built over the years and the favorable cost structure, we believe that we are in a unique position to sort of, whether any of these kind of things play out, we would be in a position to sort of deliver healthy growth in this market.

Got it. Thanks so much. That's it from my side.

Thank you. We will take the next question from the line of Vivek Maheshwari from Japanese. Please go ahead.

Hi, Swagatan, Pavan. Great results. Two questions. The first question is, you know, and I understand the, you know, there is fair amount of volatility because of whatever is happening around us. But when I just look at, you know, your guidance of 15,000 crores F27 revenues and high-T EBITDA growth, if I just, you know, calculate the margins, the margins are actually lower than what, you know, what you would have done in like four out of five years in the past, whether FI25, FI24. And this is despite the fact that Copra is correcting, your mix is getting better, some of the new initiatives have started to contribute, the portfolio mix is getting better. So is it just because of the uncertainty that you have given this guidance as the base case or am I missing something? Would love to know that.

Are you suggesting that we are not going back to the peaks of the operating margin? Is that what your question is?

So, your margins, yeah, not, yeah, so it's still, you know, way lower than what, where, you know, let's say the last five, six years margin highs were. So, I just want to understand what am I missing, you know, if there is something dramatically different from, let's say, 21, 23, 24, 25, what am I missing then?

One thing that has to be kept in mind is that, you know, peak margin was also a year where we had low inflation in all the commodities. Now, in this year, While we would have, you know, copra tailwind, but the wave and where the crude is at this point in time, there could be hidden the crude lead derivatives. So broadly, what we've said is, you know, in gross margin terms, we expect about 350 to 400 bps expansion for FI27. We would up the ANP investment again from the current levels. I believe maybe 200 to 250 basis points can be increased in the ANP. And balance 150 bps to about 200 bps. The operating margin percentage is also a function of where your revenue is because we have had a significant revenue growth and therefore denominator effect also plays out. So while we are delivering 17% in this year, it's also because of significant denominator effect. So, therefore, keeping in all this thing, we are saying about 150 basis points expansion, and therefore, if you do the math, it will come out to about high-team EBITDA growth from a guidance standpoint that we've given.

Right. But, Pawan, just to follow up and just to clear my understanding, You know, in the past, and as I said, 3 out of 5 actually, sorry, my bad, not 4 out of 5, but 3 out of 5, the margins were closer to, let's say, 20. This time around, you know, your other part of the portfolio makes Waho, which is a high margin portfolio, is also doing better. So, you know, I don't want to, so is there a possibility that the guidance is a bit more conservative sitting today, or it is just the volatility which is what is, you know, driving this kind of guidance?

I think we would be the only company who would be giving this kind of a guidance in this kind of environment of IT in EBITDA growth. So I don't think there is a conservatism which has been factored into it. But we also need to be mindful in terms of the environment that we are operating in. And still we are saying that despite, you know, at 110 of crude and what derivatives, the crude derivatives where it is spreading at this point in time, we are still sticking out our neck and saying that we would be delivering 150 bits of expansion operating margin will deliver IT in EBITDA growth. But I think that's more than one can expect, I guess.

No, no, totally agree. No, no doubts about it.

And I think let us stabilize also, in the sense that let the situation stabilize, maybe after one or two quarters, you will get a better visibility. Right now, this is a base case kind of a situation in terms of 150 bits expansion, you know, what he's talking about.

Sure, sure. And I just want to clarify, it was just about the math rather than anything. Not to say that your guidance and your disclosures continue to be the top notch, I would say. The second, without making it very abstract and open-ended thing, but Saugat and Pawan, what will be the top one or two things? Because your execution is good. In the toughest of the commodity cycle, you have done very well. What are the top one or two things that you worry about at this juncture for FY27 and which we should also monitor for your business?

So I think if you look at it, obviously the macro geopolitical, this one, fortunately, of course, our Middle East contribution is low. The macro geopolitical, this one is important. And obviously, FMCG and the kind of portfolio we have, whenever there is inflation, it has an impact in terms of consumers either down trading or out trading. You see the macro factors. I believe as far as internal factors are concerned, the way we are going about doing it, I don't think, and we are on a momentum on that. I don't see that as an issue, but obviously we have to watch out for the macro factors, because if you see historically, inflation is FMCG consumption's biggest enemy, especially in the bottom of the pyramid or in rural. And the last one is, another monitorable is, if it is a strong L-NO year, in terms of L-NO effect, impacting consumption towards the back half of the year, stretching into the quarter one of next year. But all these factors are not medical, this one, but I believe at this stage, I think in terms of the machine that is running, we are okay. Right now, there are more of the external factors than internal factors.

Got it. Very interesting. Thank you very much. Wish you and your team all the very best. Thank you.

Thank you. We will take the next question from the line of Nihal Mahesh Jhaum from HSBC Securities. Please go ahead.

Yes, sir. Good evening, Sabat and Pavan. I had two questions. First was on the PCNO part. So what would be the relative price index at this point in time after we've taken the price cuts and given a firm view of Copra that we already have, what is the incremental pricing action we are thinking?

As of now, I think we have taken that what Pavan alluded to at around a 10-10%-ish on the non-price point tax. I believe Copra will be range bound. We could manage with this. We'll manage. We'll see. Wait and see. And as I said, we seem to be in a relatively advantageous position compared to the other deflationary cycles because of weaker competitive positioning because of all the supply chain issues.

Right. But the 10% cut would still, from an RPI perspective, take a premium to the loose coconut oil. So is that something we'll consider in terms of readjusting or we are not looking at that as a metric?

So even last year, when the corporate prices increased by more than 120-130%, we did not take as much price increase. We had taken about a 60% price increase. So from a pricing, RPA standpoint, we are not significantly off. And as I said, we've taken calls from certain non-price fund prices required, and depending on corporate trajectory, we might take certain calls. At this point in time, the visibility is that we would want to stay with this.

And just to add, I think the price elasticity model has got challenged in the last year because we were ourselves surprised because of the strong brand equity of parachute that we were able to carry on a flat volume growth in spite of 60%. So therefore, there could be a case of a recalibration of our pricing model over the next couple of years.

Understood. The second question was on Flix. If you could just say, you know, what was the ballpark EBITDA margins for this year, given you've been alluding to, you know, looking at margins and the brand did a breakeven last year. The second part of the question was that when we bought the brand, the hero product was ACV and foods was a much larger contributor. And given the trends you see, at least in terms of weight loss, what is it that has changed where the focus is now shifted more to personal care, where I would believe that this part of the portfolio, You still have a lot of scalability and should ideally be a much higher contributor to growth. So yeah, that is the question.

So I think clicks currently should be hitting around mid to high single digit kind of a thing. We hope very soon it will get into double digits. Yes, we started with ACV. I think what it pivoted towards, and that is a function of, you know, see, PLIC stands for plant-based and hair and skin food. And hair and skin food is what we pivoted. If you look at all the PLIC's play in personal care, we believe that the personal care had higher profitability. It expanded time. The brand could carry itself up. But you will see similarly some of the launches, even in the nutraceutical, this one, over the next couple of months. I think, secondly, what we have focused on Plix is, and you see, we have a very strong D2C play. And I think D2C is around, what, 45% of the business in Plix. And therefore, we own the consumer. And it's a profitable CM2 D2C play. So therefore, it is important that we start cross-selling, up-selling. So therefore, it could be an ACV consumer having a hair growth serum. And that's how the plix has played. So the overall portfolio has pivoted towards that. Having said that, we will see action in the nutraceutical space. In fact, we have just launched an ACV canned drink. It is available, I think, in one or two quick commerce players. And we will, as you know, globally, there has been a shift from carbonated soft drinks to healthy drinks, especially developed markets. We have just launched one. So, you will see some of the plays in nutraceuticals plays also. Now, the other thing is this, that between Plyx and Cosmix, Cosmix will be in the slightly more serious nutraceutical and protein play. So, they will be in the vitamin supplement, this one, nutraceutical play. Plyx is a more fun brand, you know, so it's a slightly more fun brand. So therefore, we will then straddle both the things together. But going forward, we believe the center of gravity of clicks will be more towards personal care, which is far more profitable in the long term.

Thank you so much, and I wish you all had the best.

Thank you. We will take the next question from the line of Suddesh Deshmukh from IFL Capital. Please go ahead.

Oh, hi. This is Percy here from IFL. So, my first question is on... Am I audible? Yes. Yeah, yeah. So my first question is on the construct of the overall hair oil markets between Waho and Coconut. We have seen in the last few quarters, very strong growth in Waho across all companies, not just Marico. And do you think this has got anything to do with the fact that Copra price has, I mean, the coconut oil price has become very unaffordable? So there is a little bit of market share shift towards Vaho. And going ahead, do you think that market share shift could reverse a little bit where Copra price is coming down And there could be sort of a little bit of market share move towards Copra away from Waho. These are, of course, not very, very large shifts, but to some extent, can it bring down the Waho growth and can it actually accelerate the Copra growth and act as a buffer against the general sort of slowdown we see during a deflationary cycle in volumes of Copra?

See, as you know that we re-pivoted our strategy on Vaho. What had happened is that there was a significant focus between the two major players on price points, especially in Amla and Mustard, and therefore we decided that and therefore also a lot of spend went from ATL to BTL. A couple of quarters, we decided that we should, as a leader, you know, one of the volume share leaders in the category, we must invest behind category growth, and therefore, in the mid and the premium segment, which are much more higher profitability. Consequent to that, if you notice, from Q2, Vaho growth started accelerating. Obviously, the GST reduction has helped because share from some of the smaller players or some unbranded Vaho to branded Vaho, that has helped. I think that is the reason, and we are extremely confident that we will be able to consistently deliver higher growths in Vaho, including double-digit consistent growths.

Right. My starting point was that, of course, you have done good actions on Vaho, no denying that. But across the industry, if I look, because many players are listed, we are seeing all the players reporting extremely strong growth on Vaho. So it seems to be more of an industry phenomenon in addition to, of course, you're doing maybe slightly better than the industry. But overall, Waho industry, not only in value terms, but even volume terms, is growing way above what a long-term average would be. So the question was in that context. Maybe I'll take that further offline. Also, just wanted to understand the second question on Plex. It's had a huge ramp up over the last few years, and I think it must be coming close to touching 1,000 crore kind of ARR. So, do we see any kind of slowdown just from the point of view of absolute size of the brand? And what kind of growth can we expect in Plix as a brand? Of course, I'm seeing food and personal care put together at the overall brand level. Can it keep growing at a sort of fast clip or at some point of time? There are some barriers that we hit in terms of it needing some new channels of growth in addition to sort of online. What are your thoughts on these?

So without getting into specifics, let me tell you, I think Plix has an added advantage of a far more broader TAM than some of the other, you know, brands because they either play in BPC. This is one of the very few unique brands that play across two distinctive categories, which is nutraceuticals as well as nutraceutical wellness and personal care. Coming to, of course, you are right. I mean, as it reaches a certain number, you can't be expecting that kind of a growth. But I'll give you the philosophy, broader philosophy of our, you know, overall digital play. We are here to build to last. We are here to create a sustainable, profitable, consistent growth in the business. So for me, any day, I will, you know, vote for a 20-25% growth with significant increase in, steady increase in profitability, over a 60% growth without any increase in profitability. And I think Clix is a brand and beard also, we have shown we can do both. So obviously, I think as long as the digital business continues to grow 20, 25, 30% and be consistent on the journey to, you know, go into the team's, you know, profitability, you know, which we have talked about in 2030, we'll be happy.

Do we need unlock of new channels for 20-25% growth in the brand?

I think, as I said, we believe in maximizing full potential. Focus is a very important thing. I think food is something which we believe has a far better omni-channel potential versus BPC, but we are open to it. I don't think there is any capability or resource concerns to the growth, but we want growth which is mindful as opposed to growth which is pray and pray.

Sure. That's all from my side. So thanks a lot and all the best.

Thank you. We will take the next question from the line of Aditya Soman from CLSA. Please go ahead.

Hi, good evening, and thanks for the opportunity. So, two questions. First, on the sort of guidance of 15,000 crores. Now, the growth is obviously lower than what you've delivered, and is this largely a function of sort of deflation in copra prices, or is there anything else that, again, which is why the growth is more conservative than what you've delivered next to last year?

So, I think delivering double-digit revenue growth is not conservative in any category and any sector. I don't know where you are coming from in terms of conservatism in this. See, this year, what happened is significant inflation that was built in. What we have said consistently that we are confident of delivering high single-digit growth in India, a kind of a mid-teens, kind of a constant currency growth in the international business. And, uh... And subject to that, that leads to a kind of a growth, which is, again, a double-digit revenue growth overall blended. Obviously, as you know, that we have taken some pricing correction in parachute in the non-this one back to the extent of 10% that is being incorporated into the revenue expectations.

So that's very clear. Thanks. I just wanted to check if that parachute price cut because the guidance was similar even earlier, right? So I mean, I'm assuming that you already factored in that there'll be a price cut for parachute.

Exactly.

Thank you.

Thank you. Thank you very much. Ladies and gentlemen, we will take that as a last question for today. I now hand the conference back to the management for closing comments.

Thank you for listening on to the call. To conclude, we close FI26 on a very strong note, achieving multi-year highs on most of the key business parameters in India and international business. These results underscore the strength of our brand's disciplined execution and strategic diversification and premiumization initiative across geographies and categories. In a volatile environment, we believe that our ability to foresee and manage risk will continue to hold us in good stead. I have some of you rightly mentioned that we are in a unique position in terms of RM cost, which is great positive for us. In addition to this, positive shift in digital businesses, growth trajectory in premium Waho, strong momentum in international business gives us confidence on the top line, bottom line guidance that we gave. So we will remain focused on sustaining the underlying volume growth momentum and improving the earning growth trajectory meaningfully in FY27, while continuing to make consistent investments in pursuit of our FY30 strategic aspirations. That's it from our side. If you have any further queries, please feel free to reach out to our IR team, and they'll be happy to address. Thank you, and have a great evening.

Thank you, members of the management. On behalf of Merico Limited, that concludes this conference. Thank you all for joining with us today, and you may now disconnect your lines.