Marico Ltd. is set to achieve “meaningful profitability” in its portfolio of digital-first brands within the next three years, according to Saugata Gupta, the Managing Director and Chief Executive Officer.
The current portfolio includes acquired brands such as Beardo, True Elements, Just Herbs, and Plix, along with two organic brands—Pure Sense and Coco Soul—spanning both food and personal care categories.
In the third quarter of FY24, these brands achieved an annual run rate of INR 400 crore on exit basis. Marico’s objective is to generate 20% of its domestic business from the combined digital-first portfolio of food and premium personal care.
The company is actively pursuing increased profitability in these ventures through scale expansion. It anticipates that the overall Ebitda margin will not be significantly affected by the scale-up, given that the majority of products exhibit accretive gross margins.
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“The biggest improvement in D2C business has been in terms of the burn rate… the entire diversified portfolio of both food and digital will become meaningfully profitable by 2027,” Gupta said.
The company aims to achieve a double-digit Ebitda margin for its digital-first brands within the next three years.
Beardo, the men’s grooming brand acquired by Marico in 2017, is already operationally profitable, according to Gupta. The premium personal care brand, Just Herbs, and the health food brand, True Elements, are expected to achieve Ebitda break-even next year. Additionally, Gupta anticipates that the plant-based nutrition brand, Plix, will generate INR 200 crore in revenue in FY25, with margins higher than the overall foods category.
For FY24, Marico is revising its expectations for the foods business, now anticipating a revenue of INR 750 crore compared to the previous guidance of INR 850 crore. The company aims for an organic top-line growth rate exceeding 20% for the overall foods segment in the coming year.
The packaged consumer goods manufacturer recorded a decrease in revenue growth and a volume growth of only 2% in the October-December quarter.
The company anticipates achieving positive top-line growth in Q4 as price cuts in its core brands, Parachute and Saffola, stabilize. This growth is poised to gain additional momentum, reaching double digits in FY25, supported by sustained price adjustments, revenue expansion, and modest inflation in copra. However, the gradual pace of volume growth is expected due to the slower-than-anticipated recovery in rural demand.
Gupta anticipates that volume growth will fall within the mid-single digits during the first quarter of FY25.
Marico has also guided for a gross margin expansion of 450-500 basis points at the FY23 level. This increase is expected to be supported by favorable input cost trends, a strategic emphasis on premiumization, and enhanced margins in the food and digital business. However, the growth in operating margins is projected to be constrained, reaching a maximum of 250 basis points, capped at 21%, owing to elevated advertising expenditures.
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