Marico Ltd (NSE: MARICO) Q3 2025 Earnings Call dated Jan. 31, 2025
Corporate Participants:
Saugata Gupta — Managing Director & Chief Executive Officer
Pawan Agrawal — Group Chief Financial Officer
Analysts:
Abneesh Roy — Analyst
Percy Panthaki — Analyst
Avi Mehta — Analyst
Arnab Mitra — Analyst
Karthik Chellappa — Analyst
Bhavdeep Vora — Analyst
Sheela Rathi — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to the Marico Limited Q3 FY ’25 Earnings Call.
We have with us the senior management of Marico, represented by Mr. Saugata Gupta, MD and CEO; and Mr. Pawan Agrawal, CFO.
As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded.
Before we get started, I would like to remind you that the Q&A session is only for 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 Marico’s Investor Relations team.
I now hand the conference over to Mr. Saugata Gupta for his opening comments. Thank you, and over to you, sir.
Saugata Gupta — Managing Director & Chief Executive Officer
Yeah. Hi, everyone and all those who have joined the call and my best wishes to all of you for a very happy and prosperous 2025.
I would like to begin by sharing a perspective on the operating environment during the quarter, followed by our performance and the strategic objectives going forward. The FMCG sector exhibited reasonably steady demand sentiment during the quarter. Retail and food inflation were at elevated levels, but showed some signs of easing in December. Urban demand remained stable yet soft on a sequential basis, whereas rural continued to witness improvement growing at 2 times some urban on a year-on-year basis for the third consecutive quarter.
Resultantly, HPC categories continue to perform packaged foods on a year-on-year basis. Continued government schemes, rise in MSPs and a favorable crop season bode well for the ongoing rural recovery. In urban — in urban, consumption sentiment remained reasonably stable amongst and healthy amongst the affluent and upper middle-class segments, while middle and bottom of pyramid segments appeared relatively subdued by inflation and slow wage growth. Pricing growth across categories was up sequentially as companies implemented pricing hikes to counter margin pressure from the sharp rise in commodity prices.
Moving on to our performance. India business posted a sequential uptick in underlying volume growth and a robust high-teens revenue growth. Offtake growth remained healthy with over 90% of the business gaining or sustaining market-share, about 80% of the business either gaining or sustaining penetration, both on a MAT basis. From a channel perspective, alternate channels continue to drive growth and gain salience. The GT channel has been seen prolonged sluggishness due to the evolving inter-channel dynamics, conflict and shift in consumer behavior.
While the share of alternate channels has been on the rise in Tier-1 markets, we believe GT will continue to be relevant and dominant channel, especially in Tier-2 markets and beyond. We will continue our focus on driving differential growth in our urban-centric and premium portfolios through the organized retail and e-commerce channels. Therefore, we will aim to deliver consistent and competitive growth in the medium-term through a sharper and more targeted portfolio and scale strategy in each channels.
Delving into the domestic business, I will now touch upon the key trends in each of our categories. Parachute posted a resilient performance despite a steep input and pricing increases absorbing a circa 1% volume impact due to MLH reduction in one of the price point packs. The brand maintained its stronghold through market-share and penetration gains. We have taken another round of price hikes towards the end of Q3 as forecast suggest copra prices will remain firm in the near-term. We’ll closely monitor consumption trends with this high pricing and the transient impact of inflation of price point tax in the near-term given the persistently inflationary market conditions, which are expected to improve soon.
Saffola edible oils also demonstrated stability despite significant price hikes over the past few months, driven by the import duty hike. We expect the brand to remain steady unless there is significant volatility in vegetable oil prices. Value-added hair oils, while subdued recovered sequentially and maintain an upward trajectory in-market share, excluding the bottom of pyramid segment where we are facing unreasonable competition, the portfolio delivered 3% growth, which is in-line with overall BPC categories. We’ll continue to reinforce our market leadership through strategically increasing ATL spend and focusing on growth in the mid and premium segments while gradually improving, rural sentiment is likely to support consumption in this category.
Food business scaled-up to around INR1,000 crore ARR in Q3, which was underpinned by broad-based growth in the core and the new franchises. You would recall in 2020, we had taken this aspiration of developing a INR1,000 crores food portfolio when we have finally reached them. Saffola Oats delivered double-digit growth and maintain its position as the number-one brand in the oats category. True Elements and plant-based nutrition portfolio also scaled-up well. Following the substantial expansion in gross margin last year, we expect gradual improvement in the profitability of the foods portfolio as we build scale in the medium-term.
The premium personal care portfolio performed well in-line with expectations that digital-first portfolio scaled ahead of expectations reached INR600 crores in ARR in Q3. Beardo is on-track to deliver double-digit EBITDA margins, reinforcing the long-term focus towards driving consistent growth and improvement in profitability in the medium-term. We maintain our aspirations to achieve double-digit EBITDA margin in the digital-first portfolio by FY ’27. The component revenue-share of foods and premium personal care, including digital-first brands in the domestic business stood higher at 21% in nine months FY ’25 despite significant pricing growth in the core portfolios.
These businesses are now clocking a combined ARR of around INR1,900 crores and represent a phenomenal shift in the growth trajectory and the potential of the India business in the future. This is a testament to the tremendous conviction, capability building efforts and strategic investments made over the past four years. Further, a notable improvement in profitability of these businesses over the last couple of years reinforces our focus on driving sustainable diversification in the medium-term.
The international business sustained its double-digit constant-currency growth momentum. The business has continued to chart a resilient top-line and profitability performance despite the impact of currency headwinds in key markets. Currency headwinds had a 2% impact on consolidated EBITDA this quarter. The Bangladesh business delivered a robust growth and continued to demonstrate competitive moat even amidst the challenging macro-environment. MENA delivered strong growth and aggressive market-share gains across both the Gulf and Egypt markets.
South Africa has been a consistent performer as well. Southeast Asia was muted due to a tepid environment in Vietnam and geopolitical issues in Myanmar. The new country development or exports market has been scaling up healthily as well. We are confident of maintaining the strong double-digit constant-currency growth trajectory in international markets and gradually unlocking the margin upside to scale benefits in the medium-term.
To sum-up, both domestic and consolidated revenue growth along with the underlying India volume growth reached a 13 quarter high amidst the challenging inflationary environment. The international business has also sustained its double-digit constant-currency growth momentum. We are on track to achieve double-digit consolidated revenue growth for the full-year. As a result, we are well-positioned to meet our aspiration across most key performance metrics set at the start of the year alongside our strategic diversification goals in both India and international markets. While input inflation has been higher-than-expected, this has put some transient pressure on profitability.
As far as copra is concerned, it follows an 18 to 24 month cycle and we are nearing the end-of-the inflationary cycle. Prices are expected to cool down once the flush season resumes from early Q1 FY ’26. However, the gains will come to us with some lag since we maintain some level of position at current levels as well. That being said, our ability to take pricing in parachute ongoing cost management initiatives and the scale-up of foods and digital-first businesses in India as well as MENA and South Africa international business enables us to contain the impact.
We remain committed to achieving top-quartile volume growth in the India business and double-digit consolidated revenue growth in the near and medium-term as well as double-digit constant-currency growth in the international business. One of the things we have managed to do reasonably well is our ability to anticipate an opportunity or a threat and be ahead of the curve. You will recall, first, we called out and addressed the inter-channel conflict in India as early as 2019, ’20 as well as the GT stress and the need to support the distributor ROI four to five quarters ago.
Recognizing the early signs of stress in GT, we chose to proactively invest and adapt a measured and structural approach to address the issues. This included actions such as segregating facts across channels, implementing a minimum operating price and elevating our strain on our partners by reducing working capital pressure. In addition, Project State 2 has extended into 11 states now. We expect the results of initiatives to revive GT growth to reflect in our performance over the coming quarters while the improving consumption trends persist.
Secondly, we are one of the very few companies that continue to invest in brand-building across input cost cycles given our strategic intent to continually strengthen the long-term equity of our franchises and accelerate diversification, and we have resisted temptation to manage short-term margin by cutting A&P in a quarter. Thirdly, we anticipated the threat of D2C brands eating into incumbent players growth as early as to 2020, which has happened in some of the developed markets, including U.S.
Similarly, we identified the higher-growth potential of foods versus BPC and we strongly believe that packaged foods over a next medium-term cycle has a higher runway to growth than some of the BPC categories. We therefore initiated an ambition diversification agenda through aggressive organic and inorganic investments, which has been delivering impactful outcomes. We have also exhibited resilience and grip, which has led to our ability to tackle this slowdown by largely delivering what we have promised.
And finally, our vision of being one of the few legacy FMCG companies across the globe to successfully transform itself into a profitable consumer digital company is progressing reasonably well. This has been made possible by our unique M&A strategy, which is a win-win for both of us and the founders and our learning agility and our ability to learn from them with humility and seek founders’ mentality within our leadership in the process over a three or four-period where they earn — where they are earn-out.
Last but not the least, sustainability remains a top priority and integral to our business operations. Our sustainability 2.0 framework is yielding positive progress across all key focus areas. We are confident that our dedication to creating shared value for all will drive long-term sustainable and differentiated growth.
With that, I will now close my comments. Thank you for patiently listening and we’ll now take all your questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchdown telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles.
We have the first question from the line of Abneesh Roy from Nuvama. Please go-ahead.
Abneesh Roy
Yeah, congrats on good set of numbers. My first question is on Plix brand and True Element. So if you could tell us in terms of distribution scale-up with respect to these two specific products, how is the scale-up and in the next one year how much more can happen. In two elements, competitive intensity, I think is quite high. There are lot of similar kind of companies in both legacy and startups also. So if you could discuss how things are on competitive intensity. And in terms of, say, profitability, how are things panning versus internal expectations?
Saugata Gupta
Okay. So if you ask — first, let me ask you the last question. I think the cash burn-in the business fix is profitable and the burn rate in two elements is extremely low. Now coming to the growth expectations, see, one of the things we believe in digital businesses is to have a sustainable profitable growth trajectory. Given a choice between 60% growth and high cash burn and 25%, 30% growth and having responsibility towards both capital — capital utilization and managing profitable scale-up is the second choice we have taken. And therefore, as long as we deliver that kind of a growth, we would be happy.
Now I think as far as GT is concerned, one of our learnings has been that you know a lot of so-called D2C or digital brands end-up taking costly displays, beauty advisors, putting in all the 200, 300 SKUs and perhaps after an sometimes offtake doesn’t happen and they have to talk — they take the stock back. So we have been, I think, doing a little more defocused way, for example, in Beardo, we learned that you should only do the hero SKUs, which are six or seven SKUs. Now in food, obviously, the opportunity for GTs are higher. In the case of Plix, what we are doing also is that we have got some specialty SKUs like we have a smaller ACV, we have got a coconut in a powder, which is can be added to — so we are creating a portfolio for GT rather than having the same set of products.
And also other thing that happens that if you are running in e-com or your own D2C significant discounts and then you are not passing on in GT because GT is sold at MRP, those stocks don’t sell. So therefore, we have now realized that you need to have a significantly differentiated portfolio. So I think you came to — I think you talked about two elements competition. I think there is enough, I think, opportunity and headroom for growth in the markets. The way we look at it that between Saffola and True Elements, we will occupy different market categories and work together and grow and there is enough opportunity and there is enough TAM in the categories because I think healthy eating or better-for-you products is something which will actually grow in India.
Plix, of course, is a huge headroom for growth in some of the formats or some of the places where it can move into. So therefore, we are very excited. We are extremely confident that Plix will hit a INR500 crore number very soon. And I think having said that, we are not pushing the digital businesses to do obscene 70%, 80% growth and do our cash burn. That is something which we don’t want to do. We believe in build-to-last and businesses which are healthy and sustainable over the long-term.
Abneesh Roy
One follow-up on Flick, though INR500 crores very soon — that very soon is FY ’26 or ’27. And second, when you had acquired Flick, clearly very differentiated portfolio and innovative company, now what are the SKUs or formats which are working? And in terms of pricing, have you made it more affordable because pricing at that time was definitely on the higher side, but with your scale and expansion and overall ability to price it lower has the pricing become more affordable for the customers?
Saugata Gupta
Yeah. So, I think we in GT, we are prototyping certain packs which have a lower MRP because we believe that I think lower outlay is important. I think see pricing and at the end-of-the day, product, I think we are pretty okay. The question is, of course, that we don’t want to — we are not into the — in this one of doing too much discounting because that finally dilutes the equity, it drives commoditization of the category. And ultimately, I think AOV and we ensure that we have a healthy CM1, which is very, very important for our sustainability of digital businesses.
Abneesh Roy
Understood. My last question is on the Parachute business. So double-digit price hike, have the other listed players who are also much smaller in coconut, have they also taken similar pricing because I do see them being a bit more aggressive on promotion?
And second, coming to the 3% volume growth, two sub-questions here. One is if you could elaborate if that 1% adverse impact on volume, will that continue in Q4 in terms of that factor has change. And in terms of the volume growth again 3%, again, rural is it 2x of urban in this category for you?
Saugata Gupta
No, I talked about rural being 2x of urban for the FMCG category, specifically this one. For us, it’s been a little more rural than urban. Now you — the second question you asked on the shrinkflation, yes, it will continue because anniversarization may only happen in Q2, Q3 because Q2, Q3 sometimes in Q2 and Q3 and so that will continue for a couple of quarters. But one of the things that could happen is that as we said that we are perhaps on the end-of-the inflation cycle and when the deflation comes, we might want to neutralize those inflation, but adding volumes back as and when the opportunities arises between Q2 and Q3 this year.
Abneesh Roy
One follow-up, so the last one from my side. So you did say that in FY ’26, copra could correct and that’s a very fair observation given agri commodities behave like that normally after sharp inflation, sharp deflation can happen. My question here is, would you be worried on that because one price cuts could happen in FY ’27, say, starting FY ’26, say, starting Q2, which means operating deleverage can happen in that part of business?
Second is local sales also come back. So on these two aspects, what will be your thought, sir? I understand currently no one can say [Foreign Speech] deflation [Foreign Speech]. But from a political perspective, how would you fight the deflation issue on the operating deleverage issue and the local players coming back, how you will be able to fight those?
Saugata Gupta
So, I think two things. One is, as you know, given the MSPs of Copra, the downside is not very-high, okay. Secondly, having withstood multiple cycles, I think we have refined our strategy and we are not particularly concerned about that. I think if I look at the last cycle, we corrected ourselves within 1/4 of the volume growth. So, I don’t think as I said that I think after continuing these cycles, we will not be in the past, yes, I think in 2018 or something, I don’t remember two cycles, we have made some mistakes in terms of not taking proactive price hikes, quite proactive price drops. We also know how not to keep in terms of the stock covers and all that when the deflation occurs.
So, I think we are far more refined in this one. And as you know that in terms of the smaller players, broadly, I don’t think even during the — we are not seeing significant lack of activity or this one even in the inflationary cycle because some of the so-called organized players are also not making money and you referred to some promotions that some people are giving. But so I don’t think the behavior has changed during inflation or deflation of some of the branded competition.
Pawan Agrawal
Also just to clarify, earlier we were more conservative about copra prices in terms of taking the pricing correction because the dependence on profitability was far higher. Now given the structural levers that we have pulled in the last couple of years where we have improved profitability on various fronts. Here, we’ll be more proactive in terms of passing on the benefits to protect the volume and consumer franchise and therefore, we are not too worried about if the deflation sets in and sets in rapidly whether it will impact the volumes. So we are far more confident at this point in time that we would be able to pass-on the benefit to the consumers proactively and still deliver decent volume growth.
Saugata Gupta
Actually, just to add to that, I think what we can promise in the next three to five years, we will not discuss copra pricing in our analyst calls.
Abneesh Roy
Sure. I am done. Thanks a lot.
Saugata Gupta
Thank you, Abneesh.
Operator
Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go-ahead.
Percy Panthaki
Hi,. Congrats on a good set of numbers. I just wanted to understand your food business a little better now that it has gained some kind of scale. So could you just very roughly break-up the total business in terms of percentage contribution of different segments, be it towards honey or whatever else?
And secondly, if you could give some idea on what kind of EBITDA margins this entire food business as a whole is generating and what kind of margins you would target over a three to five-year kind of a period?
Saugata Gupta
So, I’ll give you a broad macro flavor, Percy. I think if you look at it, obviously, the largest is the oats and the oats at a scale is delivers an EBITDA and almost near the company average. So I think as you get scale, we get that, okay. And as you would recall, last year, we improved the gross margin by 800 basis-points and we are working towards capability building. Are we there fully? We are not there, but still we are 7% or I mean seven on 10 today. I think we believe that the cracks to it is to crack the GT in foods and towards that C2, one of the drivers of C2 also is to expand food outlets, of course, besides getting into chemist and cosmetic in urban.
We think that while oats and a good thing is that even in the so-called food slowdown, our core, which is oats and masala oats continue to give double-digit growth. So which means we have been able to expand the — I mean, expand penetration and that’s a penetration driver to expansion which we are doing. And as country becomes trying to get healthier options, as you know that I think one of the things in India, there is a huge this one to have better-for-you foods. We believe that whether it’s salauts and a variant which we have launched in sala millets, this will drive the core.
As far as the other things are concerned, which we believe can get scale, I think honey and soya has got some skill. Honey, we have done very well in OT. We need to do a better job in distribution as I said that once we get the say two thing right, over the next six, seven nine months, we will get the next level of growth in. We think between usually and snacking, these are another opportunities. And snacking is a big — again, we are prototyping snacking and usually is something which we are also prototyping and it’s also doing well.
So between — so these are — the way to look at it is that which are my next INR100 crore opportunities and INR200 crore opportunities. At INR200 crore, we start doing — we’re picking good profit. And the way to look at foods is that I would rather grow the next doubling of foods by doing three, four things big rather than getting into eight things small. The moment I do three, four things big and each one getting into INR300 crore, INR400 crores, you know, at then we will get into that EBITDA. And the other thing about this is that the way to look at it, yes, foods makes slightly lower-margin than personal care part of the business or the parachute part of the business. Okay.
Having said that, it makes much better margin than part of the business. So if I look at it another two, three years, it will be a 50-50 and then it will move to foods will dominate. Second thing is, as long as the blended gross margin of our new portfolio, which is digital plus premium personal care and foods, our objective is that the blended margin of the NPD or not the NPD, the diversified portfolio has to be higher than the margin of our core. And that is what we use as a metric every time.
Pawan Agrawal
And just your question with respect to the breakup. In our own portfolio, oats continue to be the largest part and we believe it will continue to remain larger at least for the next one or two years because the penetration is still low and there’s significant room for growth and we’ve been continuously delivering double-digit growth amounts. Then it is followed by two elements flex and then honey and soda is scaling up fast.
Percy Panthaki
Understood. Understood. And Saugata, when you said that the foods portfolio is having a better margin than the Saffola portfolio, two sub-questions within that. Did you mean that at current level or do you mean once it scales up over a few years?
And secondly, did you mean it at a gross margin level or at an EBITDA margin level?
Pawan Agrawal
So let me just clarify. First of all, at a gross margin level, my foods portfolio is definitely far higher as compared to edible oil portfolio. Right. As and when we get scale, as mentioned, for example, Masala, it is now making almost company-level operating margin. So overall foods operating margin will also be better than edible oil operating margin. But as we keep getting scale, it will only get better and better.
Percy Panthaki
Understood. Understood. Secondly, just wanted to understand the interplay between your input cost inflation and pricing. So just sort of trying to wrap my head around or trying to work my own estimates for FY ’26. So supposing if there is some amount of deflation in Copra and you have to drop your price, that will affect the sales negatively, but it should affect the margins positively and vice-versa. So if there is still an inflation, maybe your top line will continue to be good and the margins might be under pressure. But in either of these two cases, are you confident of delivering double-digit EBITDA growth Y-o-Y?
Pawan Agrawal
So as you rightly mentioned, Percy, that there are multiple or numerous dynamics at play. So it is very difficult at this stage to share a margin percentage, but still we will aim to hold the margin steady, while we’ll focus on delivering double-digit revenue growth backed-up by top-quartile volume growth and deliver healthy profit growth. Now as the year progresses and probably, let’s say when we come up to the Q4 earnings call, we’ll be in a better position to give you a better guidance for FY ’26, but we are definitely committed for double-digit revenue growth, which definitely will have a good volume growth and a healthy profit growth.
Percy Panthaki
Okay. Okay, that’s very helpful. Thank you very much.
Operator
Thank you. The next question is from the line of Avi from Macquarie. Please go-ahead.
Avi Mehta
Yeah, hi, team. I just wanted to clarify on this — on the foods profitability bit. So at the EBITDA level, the existing foods plus premium portfolio, which is 21% of our business, should be equal to company average right now or slightly less — I’m sorry, I just wanted to kind of understand that part. And where do you see it in FY ’27 or how do we see kind of progressing towards FY ’27?
Pawan Agrawal
No, currently, at a weighted-average level, what Saugata mentioned is that we try and manage that the weighted-average gross margin portfolio of the weighted-average gross margin of this plus digital portfolio has to be higher than the company gross margin. So, that’s one that we definitely ensure. And as far as foods margin is concerned, Masala Oats has definitely reached EBITDA of company. However, if you look at smaller foods, which is honey, soya, etc., currently these are in build-up stage. So as and when they reach about INR150 crores to INR200 crores, they will start making very healthy margins. So that is what it is.
Saugata Gupta
And the digital will hit again double-digits. So yes, I mean over the next three to five years, the aim is to merge with the company margin, but that’s…
Pawan Agrawal
Just to give you color on the digital business EBITDA, it has now moved to a very — very, very low burn, all digital business put together, it will be low-single digit. In fact, BLDO is likely to deliver double-digit EBITDA growth. And next year as a total digital business as a cohort, we definitely believe that we’ll move to positive EBITDA margin and in FY ’27, we would strive for delivering double-digit EBITDA margins.
Avi Mehta
Okay. Perfectly clear. Perfectly clear. Thanks a lot for this. And so short-term question just this transient profitability impact from higher copra and veg oils, what would it mean for as we see this year margins or does it mean like 70% — 70 to 90 basis-points contraction at EBITDA or even higher? Is there a number that you could share?
Pawan Agrawal
Yeah. See, while we are hoping to deliver 20.5% margin for the full-year, but there has been a higher-than-anticipated cost push in Copra and we have not passed on the entire hit to the consumers to protect the consumer franchise volume and prioritize market-share gains. And as you know, during these times, we lap up-market share gains. Additionally, the top-line growth also has been higher. We have moved to mid-teens and hopefully, we will be targeting high-teen growth in coming quarters. So which mathematically also impacts the gross margin due to denominator effect. So as a result and mix of all this, we believe we should be able to hold about 20% operating margin for the year.
Avi Mehta
Perfectly clear. Thanks a lot, sir. That’s all from my side.
Saugata Gupta
Thank you.
Operator
Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go-ahead.
Arnab Mitra
Yeah. Hi, and, congratulations on a good performance in this tough environment. My first question actually was on foods and personal digital buffers brands. Correct me if I’m wrong, but it seems mix has been a big positive surprise on both sides. So on the foods part, my question was, is it still very ACV driven or how has been the progress in diversifying the portfolio outside ACV, which was I think the original thought also that the company had. And on the personal care side, that space seems extremely crowded serums and that space. So how is Plex managing to grow there? Is it at a big loss? Any separate like strategy there that is working for you?
Saugata Gupta
So I think two things. I think two things which are differentiated for. If you look at it, is essentially far more a D2C driven brand and therefore given the higher AOVs, it’s reasonably profitable and low cash burn. Now the diversification from ACV has started and obviously, as you know that in any nutricetical brand, you have five platforms, which is basically weight management, heart care, diabetes, gut health, bone health and sleep. So we have gone into one or two of these, and we will obviously go into this one and there is a diversification agenda. Having said that, I think it’s very important to have a hero product and get scale on a hero product because that drives also profitability. So what we are going to do also, as I said, unlike some of the other companies, we are going to only take fewer skills and go into GT and we are actually experiencing a reasonably successful GT model as in is concerned, it’s very early days.
Now coming to personal care, I think one, as I said, one is the business model, which is different. We do much more there. This one the second thing is, if you look at it, it is all about hair and skin food. So positions its personal care as hair and skin food as opposed to adjust say a basic something on beauty. So therefore, there is a distinctive positioning as far as-is concerned. And I think we are and also the products, we obviously — one of the things which any of the digital brands have as an advantage as a part of the strategic — this one as strategic partners with Marico as a strategic partners is access to Marico’s supply-chain capability, access to Marico deep R&D capability, which also adds to the development of product and cost structure, which maybe a standalone founder brand doesn’t have?
Arnab Mitra
Yeah. Just one follow-up,, on this. So when you look at FY ’26 further scaling up would online and ACV itself have a lot of headroom for growth or would you need the new platforms to work, GD to work for growing again maybe 30%, 40% on whatever you will do in FY ’25?
Saugata Gupta
So it will be a mixture of both, but I think there is enough opportunity, as I said, said that as far as — see, if I look at it in India, the biggest to consumer needs is looking good, staying healthy and young. And I think participates in both of them. And therefore there is extreme tailwind and I think there is significant capability. I think if you look at it, I believe that in terms of innovation or in terms of high-velocity innovation and digital marketing capability, will be best-in-class, one of the best-in-class in India and even I think will comparatively globally. The other thing we have started in is that we have started the international business and we are starting to sell-in Middle-East and US and it’s tracking well.
Arnab Mitra
Got it. My second and last question was on Waho, where you mentioned a slight sequential improvement though the Y-o-Y number is still negative, but your confidence on this improving further, is it largely because of the base effect that you have a decline now in the base or are you actually seeing some traction in the initiatives you’ve taken? You’ve done above-the-line and other initiatives here. So any sense of how you think the recovery happens here in terms of the confidence on your side?
Saugata Gupta
Arnab, it’s a combination of both. And if you look at it, I think last-time you were very embarrassed about reporting a minus 9% and we said that is it. I mean, we don’t — we can’t move beyond that in terms of decline. I think we have moved up. I think what we have done is two things. One is, you know, the part of the business where there is unreasonable competition, we said that let’s not, you know, not try to keep on doing BTL. We don’t believe in BTL driving growth. We believe in ASP driving growth because we believe brand equity drives growth. Now — and we are doing it independent of competitive action. And therefore, we have started investing behind mid and the premium part of the business. And therefore, as you said, that business grew 2%, 3%. We will continue doing that business. Otherwise what happens is if I just track SOV and be very happy that I maintained SOV by reducing 40% ad spend, we are doing harm, long-term harm to the category, which I don’t want to do as a market-leader.
Arnab Mitra
Got it. Thanks. Thanks. That’s it from my side. All the best.
Pawan Agrawal
Thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question, you may please press star and one. The next question is from the line of Karthik Chellappa from Indus Capital Advisors Hong Kong Limited. Please go-ahead.
Karthik Chellappa
Yeah. Thank you for the opportunity, sir. I have two questions. The first one is on channel. So, you have commented in your information updates that modern trade and e-commerce, including quick commerce has been growing at high double-digit volume growth. Could you give us some context or perspective on what those volume growths are and how divergent they are between the two channels?
Saugata Gupta
So, I think quick commerce obviously is the biggest driver of growth and what we have realized that we need to have a differentiated portfolio in quick commerce so that it — and interestingly when some of the digital brands are also doing well in quick commerce, you know. Now coming to modern trade, there is, yes, it’s organized we will respond, there has been a little bit of a slowdown in modern trade. Having said that, I think we are still growing double-digit in both you know, marketplace e-com and modern trade, the growth in quick commerce is being 50% plus.
Karthik Chellappa
Got it. And over how many quarters do you think your GT growth will start to catch-up with your company average growth at the domestic level? Because right now it’s flattish and you’re implementing a lot more initiatives. But once that starts to bear fruit, how many quarters in your estimate will it take for the growth to converge with the company average?
Saugata Gupta
So I think if you ask me over the next three, four years, obviously OT is going to higher than GT. I think what we are trying to do is to get GT back on-track and also get the GT or what I call the infrastructure stability, which is basically ensuring that our partners ROI. One of the interesting things about the inflation is that if we are delivering double-digit revenue growth, it is actually positively improving the ROI of the partners because we had faced deflation in the last two years. And so I would say that GT, we are expecting GT growth to marginally improve. Converging into the — this one growth is unlikely to happen. I mean because that is the case for all the — I mean the entire sector.
Having said that, I think if we can crack premium personal care, chemist and beauty outlets and also, you know food, I think this will have an accelerated growth, especially in GT urban. Should deliver a higher-growth in GT rural along with this. And the last thing is that we are also — which is a different thing, which is of a digital brand, we should be in the next two years also having — we should be able to crack a reasonable amount of GT, but we will not be, as I said that we are not going to be super ambitious on GT there because we believe that we need to double up and be specialized in one or two channels.
Karthik Chellappa
Got it. Last question from my side. Sir, as far as value-added hair oil is concerned, although it’s declining in 2% in value terms, is there any geographical disparity in that growth? Are there certain geographies which have started showing positive growth? And if so, which ones would they be?
Saugata Gupta
See, it’s mostly on Santi and rural, as I said that, we are facing a unreasonable competition with disproportionately unsustainable BTLs, which we don’t want to compete with because we believe in long-term equity building and ATL in ATL the — in terms of ATL works far more better in long-term equity creation than BTL.
Karthik Chellappa
Got it. Okay. Thank you very much for this, sir, and wish you and the team all the very best-in the following quarters.
Saugata Gupta
Thanks so much.
Operator
Thank you. The next question is from the line of Bhavdeep Vora from Franklin Templeton. Before you go ahead, thank you question, I’d like to remind participants that they may press star and one if they wish to ask questions. Please go-ahead, Bhavdeep.
Bhavdeep Vora
Sure. Thank you. Thanks for the opportunity. So my question was on the different channels. If you could describe the salience of different channels, so GT, MT and e-commerce in the domestic India business? And if you could comment a bit in terms of the profitability of various channels and working capital intensity, how would that be between the channels?
Pawan Agrawal
So basically all trade channels contribute about 30%. Then there is a CSG, which is double personnel, that is about 67% and balance the GT. Now, we haven’t really gone public with respect to channel-wise profitability. But yes, the profitability in GT is better than channels. Having said that, we have taken a lot of measures to improve profitability on alternate channels, that is not very, very significantly different from GTU. Now in terms of working capital intensity, of course, the receivables, et cetera is higher for our total rate channel and that is why you would have seen that debtor days would have slightly increased. But over there also, we are having a very tight control and we believe that this will remain at this level where we have reported.
Saugata Gupta
Just wanted to add that we believe that the role of alternate channels is to drive premiumization, upsizing and diversification. And therefore, one of the things we have been doing is that clearly identifying one is having different packs, especially in our core like parachute and also identifying GT advantaged SKUs and MTOT advantage SKUs.
Bhavdeep Vora
Okay. Okay. Thanks. The second question was on Bangladesh. We have seen an acceleration in the constant-currency revenue growth. So if you could comment on what’s really happening in that market and how do you see kind of the next year — next financial year in terms of the expectations for revenue growth and profitability in that market?
Saugata Gupta
I think — yeah. Just to give you a perspective, I think as we have mentioned, it is on a slightly lower base because last year quarter three was soft, but the way to look at it is that we should be hitting a double-digit constant-currency growth this year also and next year also will aspire to deliver a double-digit constant-currency growth.
Bhavdeep Vora
Okay, okay. Thanks. That’s it from my side. Thank you. All the best.
Operator
Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go-ahead.
Sheela Rathi
Thanks for taking my question. Saugata, my first question was on Wahoo portfolio. I mean, you gave very detailed explanation on how we are shaping up the food business and what the trends are. But with respect to Wahoo portfolio, portfolio is — and the competitive landscape seems to be very challenging for last many quarters or so. Is there a reset or a rethinking around you know, rebuilding a portfolio here or is there any other — any part of the portfolio which we can modify to you bring back the growth trends in this particular portfolio?
Saugata Gupta
Okay. Okay. So I will give you a broad construct, which we did the reset last quarter, but these takes at least a couple of quarters to do this one. We have said that ultimately we will do a reallocation of resources towards investing between the mid and the premium part of the portfolio. We are not going to get into a dong site at the bottom of pyramid by doing too much of BTL because that doesn’t help because that dies a — that can give you growth, which is unsustainable and profitable. And we don’t want as an organization to do unprofitable and unsustainable growth because even otherwise I will get into tomorrow rice, pulses and other kinds of things, which we don’t want to do in foods also. That’s why we are having a far more value-added food than we have to follow that.
So you will see that reset happening, it takes three, four quarters. And as I said, the other thing is that if as a market-leader, I don’t invest behind growth as a category, the category will not do well. Having said that, I think the category — if I look at Vahua, it is performing as any other PPC category. All the PPC categories are growing low-single digit. Has been also growing low-single digit this negative value was coming because of the commoditization of the category, which happened in the bottom of pyramid, which we don’t want to do and that is a reset.
Now that reset takes time. But by the end of ’26, you will see ’25, ’26 that reset happening, which will lead to higher-value growth, higher-value share gain and obviously ensuring that we continue to invest behind long-term growth. And I think we need to do — we need to invest behind hair fall and some of the other thing. And by that time, we believe the consumption situation also will improve. See, when the consumption situation is not good and people downgrade or titrate that also encourages bottom of pyramid consumption.
Sheela Rathi
Understood. So what I understand is we will see more innovations coming year and we will focus less on the bottom of the pyramid. So today, what would be the share of bottom?
Saugata Gupta
I would not say focus less, I will not play on BTL. BTL can be a driver of the growth of an FMCG company.
Sheela Rathi
And what would be the share of bottom of for us in the?
Saugata Gupta
We don’t want to get into it. No, we don’t want to get into details, but it is obviously for Shanti it is used the INR10 and INR20 pack.
Sheela Rathi
Okay. If we look-back, say, three years ago, the share has been coming down. Is that the right way to look at it?
Saugata Gupta
We have not lost share in, we have not lost share in, share.
Sheela Rathi
No, no, the share bottom of pyramid.
Saugata Gupta
Yeah, yeah. The share of the bottom of pyramid and what we want to do is we want to — we want to let it come down much more rapidly.
Sheela Rathi
Understood. Understood. So 2026 is when we can see more trends emerging clearly on the portfolio?
Saugata Gupta
Having said that, it will take time. I mean, a reset requires and because we are doing it the hard way. We are not doing tactically going to the wholesaler on the 30th of the month I’m selling. We are doing it in the hardware, which is building brand equity, investing behind it will take a couple of quarters, but we are confident this is the best way to do it.
Pawan Agrawal
That is one of the reasons our value share gain has been higher as compared to volume share gain in Waho?
Sheela Rathi
Understood. And my second and final question is with respect to the foods portfolio, you clearly called out oats is a large part outside Saffola. In terms of the other parts of the portfolio, how is the competitive intensity for us? Because a lot of players, like you also said in your opening remarks that we started our food journey very early as an opportunity. So how is the competitive landscape for us now because everyone wants to do food at this point of time?
Saugata Gupta
So I think two things. One is what is important is we have a very strong brand called Saffola. And I think that in terms of the equity of the brand in expanding into better-for-you opportunities, any day a Saffola brand carries far more equity and pool and that — okay. The second part of the thing is that if you look at foods, a lot of categories have extremely low penetration compared to some of the personal care categories where penetration is almost saturated in India. Therefore, even if three or four players participate, it is okay because that grows the category. And I believe that the runway for foods in India and especially for a healthy food brand like Saffola, I think is a five-year, 10-year runway.
So we are not — I think if we go into the commoditization route and discounting route is something which I think will not give us growth. Having said that, I think as I said that one of the challenges we are facing and we must solve for it is how to create and drive expansion of distribution in what I call food specific outlets. For example, in the South, there are a lot of these bickeries in the in Mumbai, you have these dry food stores. So these are the kind of outlets we need to now have increased saliency, increased where does this something which we should tackle in the next one year?
Sheela Rathi
One follow-up here, Saugata. Is it fair to say that these categories are still e-com categories and not yet seen salience in GT per se? MT, maybe there could be some pickup. But with respect to GT, are you seeing trends where these category products are available?
Saugata Gupta
Absolutely. I think if you look at oats and, a significant portion comes from GT. While we don’t participate at least 60%, 70%, 60% of usually come from GT. So therefore GT is definitely a big category. It’s just that we have set-up that distribution. As you know that is something which we would be — we are there, but I think very much standalone modern trade is something which is — which is a very, very-high throughput food there, a lot of high-throughput GT outlets on food. We are present, but we need to do a better job and we’ll do it. So therefore there is — they are not — and if you ask me in foods, if you look at some of the successful brands, look at Epigamia, look, look at ID, look at other successful brands, even founder-driven brands or insurgent brands, they have been successful because they have gone into GT or look at Viva. So it’s not that food and personal care, I can still say you can create a INR200 crore, IN INR300 crore brand or a INR500 crore brand, you know using digital food, there is no way without getting into GT.
Sheela Rathi
Understood. Very clear. Thank you very much, Saugata.
Operator
Thank you. Ladies and gentlemen to ask a question you may please press star and 1 on your touchstone telephones. All the participants who wish to ask questions may press star and one at this time.
As we have no further questions, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Pawan Agrawal
Thanks for listening on the call.
To conclude, we have remained steadfast in pursuing our strategic objectives set-out at the beginning of the year, both in India and international markets amidst the evolving demand and macroeconomic environment. Sustained investment towards the accelerated scale-up of our foods and premium personal care portfolio in India and ramp-up in MENA and South Africa and International is resulting in a visible shift in the revenue construct of the business and we have also established an improving trend in profitability of this portfolio. While we are contending with a steeper inflationary commodity cycle than envisaged, which will have some transient impact in the near-term, we will judiciously leverage the pricing power of our brands and stay the course of our stated aspirations. So that is 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.
Operator
Thank you. On behalf of Marico Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines. Thank you