Crisil reaffirms AAA/Stable/A1-plus ratings on Marico's bank facilities
Sep 24, 2021
Mumbai (Maharashtra) [India], Sep 24 : Crisil has reaffirmed AAA/Stable/A1-plus ratings on bank facilities of fast-moving consumer goods major Marico.
The ratings continue to reflect Marico's leading position across product categories, improving revenue diversity, healthy operating efficiency and a robust financial risk profile.
Crisil said these strengths are partially offset by the susceptibility of the operating margin to competition and to volatility in raw material price.
Revenue growth for Marico in fiscal 2022 is likely to be supported by recovery in urban demand, sustained performance across its core portfolios of Parachute Coconut Oil, Saffola Edible Oils, Value Added Hair Oils and Saffola Oats, recovery in international markets, better distribution strategy and launches in the Foods category.
Despite supply chain related disruption in early fiscal 2021, the company reported healthy growth of 10 per cent, supported by strong growth in Saffola Edible Oils, Foods and Parachute Coconut Oil segments and price hikes in the key portfolios to counter the steep input cost inflation during the year.
Operating margin is expected to sustain in the range of 19 to 21 per cent supported by cost control measures, calibrated price hikes to offset the commodity inflation, while continuing to actively invest in brand building across the core and new franchises.
Financial risk profile has been healthy with cash surpluses of over Rs 1,300 crore, gearing of 0.14 times and largely unutilised working capital lines. The company is expected to have minimal debt of Rs 150 crore, which is majorly short-term debt to fund its working capital requirements.
Crisil said the company's surplus cash may partly be used to enhance in-house capacities and support new product and category launches besides possible mid-sized acquisitions.
For the Q1 of fiscal 2022, Marico reported Rs 2,525 crore in revenue (Rs 1,925 crore in Q1 of fiscal 2021) and recurring PAT of Rs 356 crore (Rs 331 crore for Q1 of fiscal 2021).
