Marico Ltd (NSE: MARICO) Q4 2025 Earnings Call dated May. 02, 2025
Corporate Participants:
Unidentified Speaker
Saugata Gupta — Managing Director & Chief Executive Officer
Pawan Agrawal — Chief Financial Officer
Saugata Gupta — Managing Director & Chief Executive Officer
Analysts:
Unidentified Participant
Mihir Shah — Analyst
Avi Mehta — Analyst
Harit kapoor — Analyst
Abneesh Roy — Analyst
Karthik Chellappa — Analyst
Abhijeet Kundu — Analyst
Nihal Mahesh Jham — Analyst
Sheela Rathi — Analyst
Anurag Dayal — Analyst
Presentation:
operator
That’s. Ladies and gentlemen, please stay connected. The conference call will begin in next few minutes. Thank you. Ladies and gentlemen, thank you for patiently holding the line. We request you to stay connected. The conference call for Marico Limited will begin in next few minutes. Thank you. It. Ladies and gentlemen, good day and welcome to Marico Limited Q4FY25 earnings conference call. We have with us the senior management of Marico represented by Mr. Sagata Gupta, MT and CEO and Mr. Pawan Agrawal, CFO. 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 the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded before we get started. I would like to remind you that the Q and 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. Sobita Gupta for his opening comments. Thank you. And over to you, sir.
Saugata Gupta — Managing Director & Chief Executive Officer
Yeah. Hi. Good evening to all those who have joined the call and I hope all of you are doing well. With FY25 having come to a close, I would like to begin by sharing a quick overview of the operating environment during the quarter gone by, after which I’ll touch upon our performance and strategic objectives for the year ahead. During the quarter, consumer sentiment remained largely stable supported by improving rural demand and mixed trends across mass and affluent urban segments. Margins for most players were under pressure due to input cost pressure. Easing retail and food inflation is encouraging for consumption trends going ahead.
In addition, a healthy monsoon season, higher MSPs and continued government spending should support the uptrend in rural growth. It is important to note that the growth of listed companies alone does not provide a comprehensive picture of consumption trends. Commentary from unlisted players, including Indian subsidiaries of multinational corporations, D2C players and regional brands indicates a slightly better performance underscoring broader demand resilience. Moving to our performance in Q4 India business continued to deliver sequential improvement in volume growth and strong top line growth aided by pricing intervention in core franchises. In the demand front, the core portfolio witnessed transient sluggishness amid steep inflation and key commodities.
Although we maintained the strong momentum in new businesses which furthered the diversification agenda, op stakes remained healthy with more than 90% of the portfolio gaining or maintaining market share and more than 80% sustaining or improving penetration on a MAT basis. While alternate channel gained salience particularly in Tier one markets, General trade remains sluggish. We are making concerted efforts to revise general trade growth with Project SETU which is progressing well. Under setu, we will focus on rural outlet expansion at a Pan India level while deploying strong control frameworks to ensure sustainable outlet expansion across markets. Quick Commerce has rapidly scaled up to 3% of the India business for the India domestic business where we are building assortment across categories to effectively capitalize on the potential of this channel.
Delving further into India business, I will now share some perspective on the performance of our key categories. Parachute had a muted quarter as a result of consumption titration which is typical during hyperinflationary cycles like the one we are witnessing currently. In addition to price hikes, we had implemented MLH reduction in select packs over the last six to nine months. Adjusting for the impact of MLH reduction, the brand recorded low single digit volume growth in Q4. Revenue growth was in the 20s aided by pricing. Parachute maintained its stockhold gaining 70bps market share on MAT basis. Given the extended firmness in copra prices due to lower arrivals in the market, the awaited correction is most probably going to happen towards Q2 as prices move from the current hyper inflationary zone to a moderately inflationary zone in Q2 which should be the case for most of the year lower we expect volume growth to pick up.
Our robust supply chain capabilities will give us an edge and allow us to be far more competitive. We already seeing first signs of supply chain disruption among local players and it is heartening to see competition taking significant price increases and reducing btl. All this will be tailwind for the brand for volume growth to pick up sometime in Q2. So full edible oil is impacted by sharp right sides taken in response to the elevated global vegetable oil prices. While revenue growth in the coming year will be aided by pricing to some degree, we expect volumes to be steady as long as vegetable oil prices remain stable.
Our priority is to maintain special level of profitability as a portfolio while maintaining basic volume growth. Value added hair oils continue to show sequential recovery after bottoming out in Q2 this year led by healthy performance in the mid and premium segments of the portfolio. We’ll continue to drive growth in this segment while undertaking focused interventions. At the bottom of pyramid segment, the Franchise has gained 120bps in value market share. We are confident of sustaining this improving growth trajectory through next year backed by continued innovation, ETL investment and focused brand activation. This strategy of driving growth through mid and premium segments and holding the bottom of pyramid will help in driving margins with mix improvement as value growth continues to improve from quarter on quarter.
Food delivered robust value growth of 44% YUI in Q4 and 30% growth in FY25 surpassing the 900 crore mark in annual revenues. The oats franchise has grown double digits in FY25 while the core portfolio of oats, honey and soya chunks have fared well. We are also seeing green shoots in the recent launch such as muesli. In Q4 we launched Sapola Kappa Oats, a four minute very tweet offering combining oats, millets and crunchy multigrain bites. Furthermore, True Elements and the plant based nutrition portfolio of clicks maintained accelerated growth momentum. The food Portfolio has reached 5x of the FY20 scale and we expect 25% growth over the medium term to reach about 8x of F20 scale while we continue to improve profitability in the category Premium Personal Care sustained strong momentum during the quarter led by digital first portfolio.
The digital first portfolio exited FY25 at a 750 crore ARR, much ahead of expirations. We now expect its exit ARR to be 2.5x of FY24arr in FY27, up from the previous target of 2x. Bru has scaled forex since FY21 has reached near double digit EBITDA margin just terms cost 100 crore revenue marked in FY25. Plic’s personal care portfolio has been gaining visible traction. Plic’s has delivered single digit EBITDA margin this year. We continue to see marked improvement in profitability in the Digital First Portfolio and maintain our aspirations to achieve double digit ebitda margins by FY27.
Moving to international business, we have sustained a double digit constant currency growth momentum in Q4 and FY25. Bangladesh posted double digit growth in Q4 and FY25 and has stood as a symbol of resilience amidst challenging operating environment. MENA maintained its growth trajectory with both the Gulf region and Egypt faring well including consistent share gains in competition and a robust performance in NPD and diversification. South Africa also maintained its consistent one. Vietnam had a relatively slower year with mid single digit growth due to sluggishness in some of the key categories. We expect recovery in the coming quarters.
Our new country development and export market has also been scaling up well. To sum up, we have achieved most of our strategic objectives set at the start of the year. We have achieved double digit consolidated revenue growth aspirations for FY25. They were supported by improving volume growth trajectory in the India business and broad based growth in overseas market. The diversification journey across markets have shown significant traction with profit improvement and we have been resilient against unprecedented input cost inflation in India. Core category growth was subdued in FY25. We expect a gradual pickup through FY26 aided by improving consumption sentiment across urban and rural, increase of hyperinflation pressure on key commodities and a significant traction in val.
Our sustained investment in scaling the foods and premium personal care portfolio has visibly reshaped our revenue mix delivering differential growth even amid softer mass consumption demand. The composite revenue share of foods and premium personal care in India business stood at 22% in FY25 representing a combined ARR of nearly 2000 crore. We’ll continue to aggressively diversify the portfolio through these in line with our medium term strategic priorities and expect these portfolio to expand to 25% of domestic revenues by FY27. The rapid scale up of these portfolios have been accompanied by significant improvement in their profitability resulting in the share of India net contribution moving to double digits which is 5x of FY22 levels.
In foods. We have structurally expanded gross margins by thousand bits over FY24 and FY25 on a cumulative basis and we expect gradual margin expansion as the business scales in the medium term. If you take a step back you’ll realize that our model is unique since our aspiration or ambition in digital business has always been far ahead of the resource available at hand given the balance sheet and P and L guardrails of a well run listed company. This forced us to engineer a profitable and sustainable growth model which does not rely on among the acquired digital brands.
We now have two distinct cohorts at different stages of their growth journey. The first cohort consisting of BO and Clicks which are profitable at the EBITDA level are going to be on accelerated growth path. We expect these two brands to cross thousand crores in combined ARR this year with a clear focus on driving operating profitability with scale. We focus on accelerated growth in Beardo and Plix along with further EBITDA upliftment. On the other hand, gas terms and few elements though not yet at breakeven, we’ll focus on sustainable 20 to 25% growth and leveraging scale and synergy to achieve breakeven at the earliest over the next 18 to 24 months.
On the overall basis we’ll drive synergies in costs and leverage. 1p data across our digital business to unlock further efficiencies, we’ll now be tapping economies of scale which is available to a house of brands with a large scale strong mothership in our case which we believe is a strong edge over standalone D2C brands. We firmly believe that we are on track to be one of the most successful digital FMCG companies in the country. The international business has navigated transient macroeconomic and currency headwinds in select markets. Our consistent endeavor in any market is to deliver top quartile revenue and profit growth.
We have achieved this in Bangladesh and South Africa. We are progressing steadily on this journey. In Veena, while you have delivered on top line growth, our margins are improving to top quartile. In Vietnam there is some ground to cover and working on GTM Transformation Portfolio diversification is underway. We also made more visible progress in premiumizing our portfolios across markets with innovation and expansion into premium personal care categories such as shampoo, skin care, hair styling, excluding hair oils and baby care. These premium portfolio in international business have grown at 24% over the FY. As a result, the premium business revenue share in the international business rose from 20% in FY21 to 29% in FY25.
We will continue to invest aggressively towards diversifying this portfolio, expand the total addressable market and driving market share against each of the markets. We are confident of sustaining strong double digit constant currency growth international markets while gradually unlocking the margin upside from scale benefits of the medium term. The experience has given us confidence that we can also try some of these initiatives in the Indian market in the days to come. The consolidated operating margin of FY25 ended just shy of 20% and we have delivered a resilient bottom line performance without any negative surprises despite input cost pressures being significantly higher than for the rest of the sector.
We have also made aggressive investments in A and P throughout the year, staying true to our strategic intent of continually strengthening our core franchise and accelerating diversification. AMP spends were up 35% in Q4 and up 18% in full year FY25. Now if AMP had grown in line with our top line growth, our EBITDA would have moved full year to 9% and would have delivered a 20.3% EBITDA margin for the full year. Now ANP sets you up for future growth and therefore as an organization we have resist the temptation to manage short term margins by cutting ANP and sacrificing future growth.
In this context, our leadership position in 90% of our portfolio, low price elasticity in our resource engine and the master brand parachute across markets is the strongest most. This has helped US to take 30% price increases in parachute with the one which has been taken last week without any significant volume impact. In addition to the pricing power exercised by our master brand parachute, the margin resilience reflects the leverage and air cover provided by the premiumization benefits from the high growth segments within India and international markets which will further get accelerated by the WAFO growth expected this year.
The culture of frugality, the strength of our institutionalized cost management framework and the effectiveness of our advanced procurement and supply chain capabilities. Also, the profit dependence on parachute will continue to be systematically further reduced as we drive growth and profitability in the high growth segments in the India and international business and confidence of visible improvement in Wahoo growth. Hence we have the capacity to deliver top quartile growth and invest behind AMP without giving margin shocks. Moving into next year we expect to sustain double digit revenue growth and strive to deliver double digit operating profit growth.
We have scaled the 10,000 crore revenue milestone this year and we are now gearing up with intent and focus to chart the course to the next 10,000 crores to move to 20k. A key aspect that has been instrumental in our journey has been the mixed depth and longevity of our talent of our teams across all levels of the organization. Last but not the least, sustainability remains central to our Strategy. A Sustainability 2.0 framework is delivering strong progress across all key focus areas and moving us towards our 2030 goals. We are confident that our commitment to creating shared value will drive long term sustainable and differentiated growth.
With that I conclude my remarks. I would like to thank you once again for your support and belief in us. I strongly believe that we are at the beginning of a virtuous flywheel. I can assure you that me and my team are working tirelessly with utmost passion to realize the dream. Thank you.
operator
Should we begin with the question and answer session?
Saugata Gupta — Managing Director & Chief Executive Officer
Sir, happy to take questions.
Questions and Answers:
operator
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on the Touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. We’ll take our first question from the line of Mihir Shah from Nomora. Please go ahead.
Mihir Shah
Hi sir, thank you for taking my question and congratulations on great set of numbers. So firstly on Copra. Copra has remained firm longer than expected on gross margins. I hear you taking another price increase in parachute leading to 30% pricing and you’re not seeing any volume backlash because of that. That’s great news. But on gross margin, how should one think about that going forward and when should one expect gross margins to start showing improvement? Or the pricing that you’ve taken to tide over the inflation and we can start seeing gross margins to sequentially improve from year on.
And for FY26, any level of gross margin that you have in mind that you can share. So that’s on question one.
Pawan Agrawal
Okay, so as far as goes for the next one. Hello, am I audible?
operator
Yes sir. Can you please mute your line? There’s some disturbance on your line.
Pawan Agrawal
Yeah. So as far as gross margins are concerned, given the fact that the copra prices have been higher than what we had anticipated, it will remain under pressure for the next one quarter for short and then we will see as to how the copra price will behave. And just to give you a sense on copra prices, typically copra has 1824 month cycle and this cycle has lasted longer and the reason being the northeast winds were not great leading to lower crop availability. But we are hoping that by end of quarter one we should start witnessing some softening.
While there could be some pressure on margin on account of that in the next one or two quarters we expect margin pressure to ease out starting end of quarter two. But having said that, I just want to allude to one point which also Shogatha mentioned that since we have pulled multiple levers of profitability over the last one or two years like expansion of margin in foods, digital businesses, some of the fast growing premium businesses and also international business scale up of the premium portfolio, our dependence on COTRA as a lever of profitability has come down and will keep going down over the next few years.
Also Shogada mentioned that we definitely expect a better improvement, a better performance in the next year and if Wahoo comes to the party bottom of pyramid that will also aid margins. So we are not overly worried about copra prices. But yes, for the next one quarter margins will be under pressure. Hopefully from quarter two onwards we can start seeing some improvements.
Mihir Shah
Great, thanks. Thanks for that Pawan. Secondly on foods, foods has delivered a strong growth since past few years. Can one say the low hanging fruits of placing new products and launches is behind and growth probably can moderate a bit from these levels. I understand that you know the guidance that you’ve given indicates a 25% CAGR continuing. I just want you to double check if that range can sustain and any new subcategories that you are thinking of adding or you’ll probably scaling the current portfolio up. So that’s on foods.
Saugata Gupta
See, if you look at foods, I think there is a huge Runway for growth and the reason is that we have not even tapped the GT at all for food so far. I think most of our food has been ot, you know, there has been OT sku. I think we have also now significantly leveraging the growth of big commerce. So therefore in terms of there’s a significant distribution initiative available. The penetration of oats and masala oats is still low in our country and therefore we have a penetration task. And as I said that I’ll give an example of honey.
We have double digit market share in organized trade. We have single digit market share, low single digit in GT just because our distribution has not, you know, we have not yet focused on our distribution as we were, you know, other other initiatives which were there. One part of the situ which is urban part of the situ is also about driving food and chemist and cosmetic outlets. So. And also I think there is two elements and two elements also I believe there’s a brand with a strong equity and huge potential. You will see expansion into some new categories which we are planning in two elements also.
So therefore we are extremely confident and as I have that growth and number two is as I said that while oats and masala oats which is the four continues to grow double digits, we have significant opportunity in muesli and some of the other categories and honey muesli again we have been so far restricted ourselves to ot. We are just about testing the waters in GT but to give you a perspective, if we are available in all masala outlets which we distribute muesli and muesli is available as a category, there is a 4x5x opportunity muesli also.
So we are not at all. I think one of the things we are doing in the last two years is to ensure that we get the profitability right now I think we have to get the GT distribution right in full.
Mihir Shah
Got it. Thank you very much, Sagatha. Wishing you all the very best.
operator
Thank you. We’ll take our next question from the line of Avi from Macquarie. Please go ahead.
Avi Mehta
Yeah. Hi team. I just wanted to ask two questions. First on you know, the expectation that we have of driving or the aspiration of driving double digit value growth in FY26 in India. Could you share your thoughts on what have you built in from an oil price perspective, especially given the recent correction in palm. Just an understanding or is that a risk? Basically what I’m trying To appreciate is while I get the point of copra deflation not panning out, my only concern was are you not worried about deflation in Safula pricing hurting our ability to reach double digit growth in FY26? And what gives you confidence there? So that was what I was trying to get at.
Pawan Agrawal
It is built on three different cohorts. One is our core business where we definitely expect first of all the volume growth trajectory itself to improve. And we definitely expect that the first half of the year the inflation rate growth will definitely support. That’s one. Second is foods, as we just mentioned that we definitely expect foods to continue to grow at 25% plus. So that’s the second build. And third is of course the digital first businesses which is growing at much higher Click. So if you do the math around these three, you will arrive at that double digit top line growth is fairly possible in FY26.
Saugata Gupta
So just to add, I think we have delivered 7% volume growth full year. We delivered 5. We expect the volume growth next year to be, I mean full year annualized with more than five and seven now has become almost like a base case for us six to seven.
Avi Mehta
Got it. Okay sir, the last bit on the margin front, while I understand the input cost etc. Could you share how should we look at SETU and any quantum of benefit from that initiative that you could continue?
Saugata Gupta
I think the objective of SETU is to improve our quality of direct distribution. As you know that our total distribution to direct distribution ratio was higher which means that our direct distribution was lower than some of the benchmark organizations. So the first impact of CETU will happen in terms of the quality of distribution in rural. It will help in range selling. It will also help in gaining market share and also drive some of the diversification agenda. You know like you know, basically what happens is if it goes through wholesale, wholesale only takes the high velocity brand or the leader brand.
When you do direct you expect a better range selling. The second part of SETU of course is the urban part of SETU where we do food and chemist cosmetic which is the second phase of SetU. But I think the first thing of SetU is to improve our quality of rural distribution. As you know we don’t sell sachet and nor we sell food. So our rural gross margin of our rural portfolio is fairly. Therefore our breakevens are pretty compared to if we had a very sashy or something other portfolio. So I think we will start seeing the results of SetU.
SetU is doing decently well and SETU impact will start happening this year. You will see the impact on volume growth. And one of the things we expect is SETU is going to aid Wahoo growth.
Avi Mehta
Okay sir. So essentially the first level of improvement will be the volume growth trajectory in particular in Wahoo. And the second leg could possibly come from a selling in urban India which should happen over time.
Saugata Gupta
But also I think in some markets parasitude rural share also could improve.
Avi Mehta
Okay sir, from current level 60. Okay sir. Okay, that’s all from my side. I’ll take it.
operator
Thank you. We’ll take our next question from the line of Harith Kapoor from Investec. Please go ahead.
Harit kapoor
Yes, hi, good evening. I just had two questions. You know, one was specifically on this quarter, foods growth at 44% has come off even a pretty good base. Actually the base growth was also over 20%. So this is the highest growth quarter for us in the year for food. So just wanted to get a sense of anything incremental that we’ve seen in Q4, whether it’s been a little higher on distribution or certain brands in the portfolio which have done incrementally better because this number is higher than what we’ve seen probably last 8, 10 quarters. So just wanted to get your sense on that.
Saugata Gupta
No, it’s a combination of three elements. One is our core foods, as we said, that has grown double digit in the full year. There is two elements and there is clicks. So all the three are driving the growth. And as I said that obviously 44% may be a number which is slightly higher than our aspiration for the full year. But I think one of the other things we have done, as I said, is that we in the last two years have significantly made efforts to improve the profitability of foods. And therefore one of the things we are going to do is that now that the profitability is improved that can we at least go into GT in a little more meaningful way and also scale up things like honey and muesli.
And if I really look at it, the other driver of food which we are now witnessed and we are, if you look at interestingly one piece of data, if Quickcom has been contributing to 3% of FMCG, especially BPC in food, Quickcom contributes only 7%. Quickcom is a big driver of food and between plates, true elements and sa, we are also investing significantly in Quickcom to drive. Having said that, I think as long as I think we will be happy if we can deliver 20 to 25% plus growth in foods over the next two, three years.
Harit kapoor
Fantastic. The Second thing was on parachute. So you know there’s a 30% increase now on prices. Could you just give a sense of what’s happening in the market? I mean, you know, where is this regional unorganized player in terms of the RPI between parachute and the regionals or unorganized? And you did speak about some supply chain issues that the competition is having which due to which they are also having to take price increases. So if you could just explain these couple of things that would be helpful.
Saugata Gupta
So we what happens is that when inflation happens in relative terms, we are more competitive because we absorb some part of the cost. Also because of our procurement efficiency, our consumption cost is not like what we have the buying cost of the market cost. Okay, so now what is happening is a comprehensive two things. There are two different things. One, for the small players because of the high cost of procuring copra and the fact that they are risk averse in buying copra at this rate. Because suppose copra prices go down, they’ll be stuck at that.
Okay, so as a result what happens is that their stock pressure, so what we are seeing, and this has just happened in the last couple of weeks, we are seeing competitive presence of some of the smaller brands are less in terms of their availability has become a problem because also they have to get working capital to buy copra at a this kind of a price. As far as branded competition is concerned, I think last year we saw a little unreasonable competition that perhaps they were not making margins. They are now making price increase in line with the cost, cost increase and sometimes disproportionate which also helps us in some one way.
And therefore what we are confident about is that as soon as the hyper inflation settles to inflation, it’s unlikely there will be a major deflation. As I said on commodity I can’t predict, nobody can predict. But as it settles down in Q2 you will see the volume growth happening. And also as I said that There is also 1% 2% drop which has happened due to the MLH drop which will be anniversarizing as we move to the second half of the year.
Harit kapoor
Great. Those are my questions. Wish you all the best. Thank you.
Saugata Gupta
Thank you.
operator
Thank you. We’ll take our next question from the line of Avnish Rao from Nuama Wealth. Please go ahead.
Abneesh Roy
Yeah, thanks. This is Avnish Roy. My first question is on the big commerce. Do you see the bargaining power increase for you given new players are expected to enter this already? You’re doing so well with 7% in food. So do you expect that now with bargaining power increasing, maybe this can even grow faster given new player central.
Saugata Gupta
Just to clarify, I said for the food category as a whole 7% for us the different banks have a different contribution but for food are higher than BPC now coming to bargaining I think it’s. See the way we look at any new channel is that you need to have a. You first need to understand the shopper. So I believe the Quickcom shopper is different from the shopper in a marketplace. It’s different from a shopper in modern trade and it’s different from a shopper in gt. For example, in Quickcom we believe convenience plays a role impulse categories have a higher throughput in quick commerce.
And given the fact that a shopper in a marketplace has browsing time in quick commerce if you are not in the first four in the screen and it’s a vertical mobile screen, you don’t stand a chance. So therefore, I think it’s important to understand that therefore how do I create a portfolio which is tailor made for quick commerce and it is not cannibalistic. Having said that, yes there is some quick commerce is taking some share from maybe marketplaces, they are taking some share from GT and therefore what we need to do is to ensure that and keep a tailor made portfolio.
Ensure that we drive offtake and not just give price discounting and not have cannibalistic sale. As long as that as the category grows I think we’ll be able to ensure that we are not profit dilutive in an equity segment.
Abneesh Roy
My second question is on the international business. Sales growth has been quite decent past few quarters. My specific question was if you could discuss volume growth in Bangladesh and mena, how the trends have been and how the mix has changed. You can compare versus last one year versus say two years back so that a longer time frame can be taken. And would you be worried on the benign crude oil prices for the MENA growth from a one year perspective, Would that impact or it’s mostly now effective to company rather than the crude oil from a growth perspective in MENA region?
Saugata Gupta
Not really. I think crude oil is not actually we are a challenger in mena. We are growing. I think there is enough opportunity headroom for both market share gain and profitability as we scale up. A significant portion is volume growth because there is very little inflation in mena. Similarly with Bangladesh. I think the one big change that has happened is if you look@Bangladesh4 5 years ago Parachute coconut oil is 90%, it is now sub 60% and it is so as I mentioned in my opening remarks, the share of premium has now gained significant critical mass and we are growing whether it’s in shampoo, baby, we have launched shower gel in Middle east and we have launched body lotion in Middle East.
And the other interesting thing was we were not present at all in Egypt hair oils in the last couple of years we have and we are gaining rapid market share. There’s a headroom for growth. So this according to me with significant headroom for growth in MENA for both top line market share and profitability in Bangladesh. We have been resilient and the diversification agenda continues.
Abneesh Roy
My last question will be on the A and P strength. So India’s largest consumer company also has cut its margin profile from the next 2 3/4 perspective because they feel that macro seems to be improving and they want to invest. So is that also a thought process? One of the thought process in Q4 because Q4 run rate is much faster than in terms of growth versus the full year. And if you could tell us if most of the increase in ad spend is towards digital and goods essentially in Q4.
Saugata Gupta
So I will, I think see sometimes it’s not fair to compare a particular quarter because there could be certain new launches. Having said that, I’ll give you a perspective of full year. Full year. I think we have grown by A and P and grown by 18%. Yes, we have significantly invested behind the diversification agenda in the international business. Having said that, we are doing two, three things. We are converting also from BTI to Atlanta. We will continue to invest behind core also. And let me tell you one thing, you know, sometimes you fall into what I call the SOV trap.
SOV trap means that if competition doesn’t spend, you think very good, I will also stop spending. As a category leader, it is our responsibility to drive category long term. We are here to grow the category long term. We are not going to sacrifice for the long term for some short term quarterly margins. We never believed in that. We have never done this. So therefore we’ll continue to behind, continue to invest behind the core and AMP will be broadly in the same line which we have done now. And I think we are also taking significant efficiencies as I said that we will having.
If I spend say NP at the same levels of say this year, I mean last year, this year we are also doing a significant efficiency program on the ANP as I talked about which is the cutting down on non production spend, cutting down from BTL to ATL so that actually we continue to drive media. The other thing you must realize today, thanks to all the digital brands, our digital buying capability and digital scale of media buying is one of the largest in the industry which is commensurate to the size of a larger FMCG player. So therefore the digital media buying efficiency thanks to clicks through Elements, Beardo and Just Hubs is also grown manifold.
So has the digital marketing capability. So that gives significant efficiencies and for the first time what we are doing is we are buying for example digital media together.
Abneesh Roy
Last quick follow up on your digital first, it has done quite well and you have been one of the early movers and early MND you have done and most of them have done well. From a FY26 perspective, will it be more of stabilizing these four to a better profitability with a very good growth or you think you need one more M& A? Because we do see lot of D2C startups available and we are also seeing other listed companies also starting to do. You have been one of the early starters but now we are seeing other companies.
If you could discuss from FY26 perspective it’s more of stabilizing the current.
Saugata Gupta
As I alluded to during my opening commentary, we see two cohorts in the digital business. The first cohort consisting of Beardo and Plix. We expect the ARR to hit thousand crore plus. As far as these two brands are concerned they are already profitable. We don’t need to do extra cash burn to do disproportionate growth. I think we’ll accelerate the growth in these two brands at the same time, get scale efficiency and continue to improve ebitda. As far as the other two brands are concerned, which is just thirds and true elements, we will now grow maybe 20 to 25% on a sustainable basis but accelerate the kind of ensure the breakeven period so that in the 18 to 24 months we see some sight of a breakeven and therefore overall if you look at the blend we are well positioned over the next FY27 to move the overall digital business EBITDA to double digit.
Now yes there could be brands available but we will continue to use the same model. We firmly believe that it is much better to take a majority stake, learn from the founders rather than doing 100% because you know that gives us a far better way of integrating and as we keep on integrating our experience and capability keeps on increasing.
Abneesh Roy
That’s all from my side. Thank you.
operator
Thank you. We’ll take our next question from the line of Kartik Chellappa from Indus Capital Advisors Hong Kong limited Please go ahead.
Karthik Chellappa
Thank you for the opportunity and congrats on the. Your volume is very low. Sure. Is this any better?
Saugata Gupta
Yes, perfect. Perfect.
Karthik Chellappa
Okay great. Thank you for the opportunity and congrats. On the quarter and also congrats to Sagata on the reappointment. So I have two questions. The first one is if I were. To look at our India P and L for this quarter, the absolute EBIT is actually declined. So despite having about 400 crore extra revenue, the EBITDA EBIT itself hasn’t moved much. So how should I see this and how much of this is you think because of raw material inflation impact and how much of this could just be a mix impact.
Pawan Agrawal
So I think Karthik, you’re referring to the segmental results that we published over there a bit. You would see there’s a marginal decline but it also includes the digital. And also if you look at there was one off hit in the base in other income. Those are the two reasons why your EBIT is on a decline. If you have to adjust the digital business, etc. Your EBITDA for quarter four for India business has actually grown by about 4 to 5%.
Karthik Chellappa
Okay. So the two biggest drags are basically the digital hit and the other income, right?
Pawan Agrawal
Correct. That’s right.
Karthik Chellappa
Okay, great. My second question is as far as the foods business is concerned and the serum and male grooming business is concerned, could you give a sense of what kind of annualized run rate we are running at? If I take fourth quarter as a base.
Saugata Gupta
I think food full year we did 900. So therefore you can expect at least a 25, 20 to 25% minimum, 25% plus growth in the food business. Now I’m not getting into serum specifically but I think serum as a category is growing and we are also growing.
Karthik Chellappa
Okay great. Because in the third quarter we had disclosed the run rate for foods at about 1000 crore.
Saugata Gupta
So if you have done 900 crore.
Karthik Chellappa
That means that is that pace is accelerating, right? That’s a reasonable inference that I can.
Saugata Gupta
So usually Q4 is a slightly slower this one for food we are seeing we are shy of crore in run rate in Q4. But usually as you know in Q2 and Q3 are the peak, usually this one for food, especially during the festive season, Diwali and other things and all the gifting that happens. So we are slightly shy of 1000 crore run rate in Q4 and that’s very. But despite that we are at a 40% growth rate. So I think you can take 25, 30% at least minimum growth rate for foods as we move towards next.
And I think we have said we have given a FY27 aspiration in any case.
Karthik Chellappa
Excellent. Just one clarification. The 30% price increase cumulative you have taken in parachute, that’s over what period?
Pawan Agrawal
Starting from last year? Quarter one. If you look at quarter four result we have given about 23% price increase. 22% value increase is a 1% decline in volume. So that’s 23% price increase. Very recently we have taken another round of price increase with 10% that is. Just going into the market. You know, just now it’s gone actually into the market last week. Yeah.
Karthik Chellappa
Excellent. Okay, that’s all from my side and wish you and the team all the very best for FY26. Thank you.
operator
Thank you. Before we take the next question, would like to remind participants to press RN1 to ask a question. Next question is from the line of Abhijit Kundu from Antique Stock Broking. Please go ahead.
Abhijeet Kundu
Yeah. Hi. Thanks for the opportunity. Actually we have very commendably shown about 13% growth in gross profit in the quarter despite all the inflation and the price hikes we have taken. So gross profit is something which is growth is something which is very important at this point in time. So my first question was on projects too. You said that Wahoo would be one of the main beneficiaries also agree. But does physics say to improve your presence in under indexed geographies of or it would be you know, both in under index and you know the existing strong geographies because you will get more depth as well.
Yeah, that is the first question.
Saugata Gupta
Yeah. So let me give you a perspective. So if you look at historically parachute strong markets are basically the south and Maharashtra and value added hair oil markets are strong in the north. Having said that, I think in strong markets of the south and Maharashtra especially south, this will help in diversification by putting the second or the third brand in because we have huge distribution already. In the case of some of the under indexed markets like in the north, like up and all where we under indexed there also we see Wahoo growth. So basically what it will do is in the south we will diversify and will help Wahoo.
It will also help in parachute rural market share. Because rural where we will now go direct in the north it will significantly improve the performance of Waho especially in under indexed markets. So we are actually relatively more under indexed in the our distribution, direct distribution in the north compared to south.
Abhijeet Kundu
Understood. And how has been the competitive environment in Wahoo? And also in case of Sapola edible oil? Because in edible oil also there has been very sharp inflation. Companies have shown growth, but volumes have been impacted. Your volume has relatively insulated. The impact has been lower. So how has the market share behaved there in edible oil? And how has been the computing environment in Wahoo? Because you said that you know your key competitor has increased prices in coconut oil as well as in other oil. So just perspective on that.
Saugata Gupta
So first let me clarify. I mentioned only coconut oil as far as edible oil is concerned. See, we have taken a conscious decision that we will ensure we give a modest volume this one. And we will definitely not sacrifice margins. We will operate on a threshold level of margin. And as you know, any case Sapola operates in with a significant skew in OT organized trade as well as Metro. So therefore we believe that we’ll be able to give modest volume growth as long as there is no significant volatility as far as the raw material is concerned.
I think in coconut oil what has happened is that the competitive perhaps in the last year we were facing two sets of headwinds. As you know, the FMCG market during COVID and the immediate period post Covid a lot of smaller players had gone out of circulation or their presence had reduced. Sometime from 2324 onwards when inflation happened, a lot of the small players started getting into the market. And obviously one year we witnessed maybe because of inflation some of the our biggest source of growth in coconut oil is unbranded to branded that slowed down and such a sometime it went reverse.
What we are now seeing in this period of inflation and if you look at this hyperinflation inflation, small players ability to buy their working capital and their ability to store. They don’t have position building and all that, they become much more uncompetitive. At the same time we have seen a case of organized competition also taking significant price increases so that they don’t make negative gross margin which both of it will help us. And that’s why we are confident that parachute volumes will start coming back in a couple of quarters. And number two, as I said in the second half of the year the anniversariation on the MLH drop will also stop to a large extent.
Abhijeet Kundu
And how has the competitive environment?
Saugata Gupta
I don’t think any master brand and that is our pricing power, that is our we operate in a low price elasticity. I don’t recall any master brand having the guts to take 30% price increase.
Abhijeet Kundu
And about the competitive environment in Wahoo. Any intensity has reviews or something?
Saugata Gupta
Not really. Not really. But as I said what we have taken a conscious call which I alluded to in the last quarter also there are two sets of things. One is the bottom of pyramid where there is a competitive intensity. There is far more trade driven intensity in terms of, you know, people moving from ATL to btl. But there is premium and a semi above. We are focusing on the mid and premium. We continue to invest atl. We are not, as I said, we are okay. I mean it doesn’t matter if I share our voice.
It is because it is our job as a market leader to drive category growth. We are seeing the first this one. If you look at our trajectory of Rahul between Q2, Q3 and Q4, every quarter we have shown an improvement and we are now pretty confident that this year we will turn positive and it will improve as with every quarter.
Abhijeet Kundu
Okay. And the last one is what will be the effective tax rate during the next few years?
Pawan Agrawal
You can take it as around 22%.
Abhijeet Kundu
Okay, that’s it for me. Thanks a lot.
operator
Thank you. Ladies and gentlemen. To ask a question please press star and one on your phone. We’ll take our next question from the line of Nihal Mahesh Jaam from HSBC Securities. Please go ahead.
Nihal Mahesh Jham
Hi, good evening and congratulations on the good performance. Couple of questions. First on the foods part of it. Just wanted more clarity on where is snacking in the overall scheme of things. Has that also achieved a certain threshold profitability? And it’s an important part of the 25% growth that we are targeting or more in the pilot stage and maybe. The growth will be beyond FY20 zone for that segment.
Saugata Gupta
So we continue to be in a pilot stage. I think it’s important first to get the GTM right. As you know, snacking is not a OT skew this one because if you have to get snacking to skill, you have to get our GT in food right. So I think we are first there. If I look at it, the first thing is we will continue to in terms of the food growth as far as Sapphola is concerned, there are three things. First is continue to invest behind increasing penetration in oats. We will continue to drive honey and we want to scale up hugely as snacking comes next I think and therefore I don’t see snacking achieving scale this month.
And of course as I said that you will see a significant some new category entry even in True elements and Plix continues to do well. And I believe that Nutraceuticals, where Plics operates the headroom for TAM expansion continues. I think Plic separates in some of them, but definitely we can get into some other things. Like if you look at a nutraceutical band, you have five elements in any nutraceutical company and one is weight management, one is cardiovascular health, diabetes, gut health, bone health, stress and sleep. Now Plix tomorrow the name is agnostic, it can operate in all.
And therefore the headroom for growth in Plix is tremendous. And I believe that Plix is a very strong equity, it has strong digital capability. We have founders and us, we are working together, partnering and creating this exclusive growth. And therefore there’s enough headroom for growth. Therefore for us food is a three vectors growth and not a single. Sure, just one follow up here. So try to think that new categories of food will be more niche with the way the historical tragedy of foods has been. And say for a large category like snacking, where it’s hyper competitive will always not be a very core focus in terms of driving it ahead.
I think if you notice one thing, what we are doing in one step at a time, if you look at food, I would first do few things, get skill and then attempt the next one rather than doing many things. Because one of the experiences we have had is that when we cry the moment we got break even in oats and masala oats which scale the, you know, the profitability gallops. So therefore one of the things we will do, we’ll do few things to scale rather than doing many things upscale.
Nihal Mahesh Jham
Understood. Second question was on Beardo and the larger D2C portfolio that it’s commendable reached the double digit margin despite, you know. Revenue is much lesser than some of the other larger D2C names who originally started out as B2C so just wanted to understand, you know, what has been. The path to achieving these kind of. Margins at this scale.
Saugata Gupta
Is it measured amt, is it more focused on profitability and less discounts or is this a right mix of channels? If you could just highlight that I think I alluded to in my commentary. Being a listed company, our ambition or aspiration has to be greater than resource. We don’t have the luxury of having resource greater than ambition.
Pawan Agrawal
And also just to add, we’ve discussed this in past, that there could be two different models of growth in digital business. One is exclusive growth of 70, 80% because significant cash burn. And the second one, which is a calibrated growth of 20 to 30% with a very high focus on profitability improvement and latter is what we have taken the approach and we are absolutely comfortable with this and we will continue to have this approach for the rest of the digital businesses. While Beardo has reached double digit operating margins, but others are also on the way and we believe in the next two years our aspiration of reaching double digit operating margins of the entire cohort we should be able to realize.
Nihal Mahesh Jham
Understood. Thank you so much and wish you all the best.
operator
Thank you. We’ll take our next question from the line of Sheila Rathi from Morgan Stanley. Please go ahead.
Sheela Rathi
Thanks for taking my question and congratulations. Agatha, for your reappointment. My first question was with respect to the opening remarks you made that you know, the growth for the listed FMCG companies may not be the right way to look at it or not necessarily. Representative of the overall growth. So just from your perspective, what would. Be your sense on the growth last. Year for the overall consumer space?
Saugata Gupta
I can’t hazard a guess. But all I can say is that the D2C and the smaller brands don’t get captured and some of the unlisted companies so it could be tad higher. That’s all I can say. Understood.
Sheela Rathi
And second question is very similar to. What Nihal just asked on, you know. With respect to Beardo, you know, getting to double digit margin just from your lens again, what would be the gestation period? Is it fair to say that the gestation period for a personal care D2C brand is about five to seven years, whereas for food it could be much longer. So what could be that number for. Food businesses when we are pursuing a similar digital first kind of a strategy as well as. Right. ATM strategy rather.
Saugata Gupta
So I think it’s very difficult. I want to do that. But what I can tell you is this, that obviously food brands, I’m not talking nutraceuticals. Nutraceuticals obviously has high gross margin. I don’t think there is a profitable model for digital only food business in this country. So they have to get into, they have to get into GT and if you look at some of the brands which are scaled up, they have gone into GT for the proportion of GT in a food founder brand is always higher than a personal care brand. While a personal care brand can perhaps I would say they should not go into too much into duty.
It’s commendable actually because that’s, that’s the best thing. Right. With respect to the journey for us on the B side on how the profitability has moved. Thank you.
Sheela Rathi
Thank you.
operator
Thank you. Take our next question from the line of Anurag Dayal from Philip Capital. Please go ahead.
Anurag Dayal
Thank you for the opportunity. Sir, one question I have on GT channel it has been under pressure for quite some time and you are due to some of the steps taken to ease pressure apart from our initiatives. Could you tell us what are these steps which we have taken and when we see growth recovering in the channel.
Saugata Gupta
I think we believe that the urban GT will continue to be stressed because I think if you look at the organized trade share in the top five six cities it’s increasing also with growth of Q commerce. Q commerce is also taking a slice from GT Having said that what we are trying to do is ensure that through a significant number of steps we want to manage and ensure that our partners continue to get roi. But I believe there is significant opportunity GT will continue to be very very critical and a source of competitive advantage. There are continue to be there will continue to be entry barrier in the smaller towns, mid and small towns and in rural and that is where we are investing a significant portion of our effort in C2 because rural I don’t see ot impacting rural even in 57 years and that is where I think a lot of our K2 initiatives and Setu investment is going and we believe that for large FMCG players defocusing on GTE is not a great thing to do but we should be at the same time it’s an and growth in India it’s not an or growth like what has happened in some of the other Western markets.
GT will continue to be remain important even in 2030. Differential SKUs for general. Trade Obviously I think see our entire effort is to have channel specific portfolio channel specific SKU and keep on reducing channel conflict and cannibalistic growth.
Anurag Dayal
And one more question I have on Bangladesh now it’s been very commendable that we have achieved double digit growth in terms of environment. However, dividend payout has been at record high in FY25 so I just want to understand the reason behind it. Does it indicate that the growth opportunity in Bangladeshi is now limited and maybe you’re looking at other international markets how to understand that the sharp jump we have witnessed surplus cash lying on the.
Pawan Agrawal
Balance sheet and it is only prudent to, you know, return it back to the shareholders rather than earning interest income on that we are not compromising on any investment opportunity. If you look at the NP also continues to grow and we believe that through continued investment we’ll continue to grow in double digit so it’s more of a surplus lying in the balance sheet that has been brought back.
Anurag Dayal
Thanks for my time. Thank you sir.
operator
Thank you ladies and gentlemen. We’ll take that as the last question for today. I would now like to hand the conference over to management for closing comments. Over to you.
Saugata Gupta
Thanks for listening on the call to conclude the year has been marked by significantly positive outcomes in each of our strategic objectives. Even while the operating environment has been challenging. Despite sharp input cost pressures, our core portfolio have remained steady and we have sustained investment towards the accelerated scale up of foods and premium personal care portfolios in India and premium categories in the overseas markets to build high growth levers which are not only margin accretive but will also systematically reduce commodity exposure over time. As a result, we are working towards the revenue and profit construction which will be far more resilient and predictable across business cycles.
While we will need to navigate inflationary pressures in the immediate term, we remain confident of delivering top quartile performance in the coming years and the medium term. That is it from our side. If you have any further queries, please feel free to reach out to our IR team and we’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 for joining us and you may now disconnect your lines.