Equity Coverage on Marico Bangladesh Limited
Equity Coverage on Marico Bangladesh Ltd.
Marico Bangladesh Limited is one of the leading consumer products company in Bangladesh with a CAGR of 13% in terms of revenue over the last five years. Parachute Coconut Oil is the most trustworthy brand which owns more than 80% of market share in the coconut oil category and also contribute about 63.6%(average) in revenue mix of the company. The company has retained an average of 19% net profit in the past five years.
Marico Bangladesh Limited is one of the largest and fastest-growing FMCG (Fast Moving Consumer Goods) company in Bangladesh with a vibrant multi-product brand portfolio across haircare, skincare, baby care, male grooming, hygiene and food categories. With the competition with existing and upcoming competitors in the FMCG market, as per the long-range plan, MBL has started operations of the 3rd manufacturing plant with aim to diversify more products and grab the market share in other categories with competitive advantages
Marico Bangladesh Limited served 43 brands included 10 categories in Bangladesh. Moreover, 150 product SKU (Stock Keeping Unit) which will open up for the customers. During the year ended 31 March 2023, the company continued portfolio diversification with new launches products in hair care and skin care categories. In FY’23, the company launches 3 new products: Parachute advanced onion enriched coconut hair oil, Go-On pink glow cream and Parachute natural onion advanced hair fall control shampoo. The new introductions are an indication of the consumer-centricity and efforts to play in the markets with a right to win for Marico. Apart from this, the company has also planned to introduce some new products in FY’24 in various categories which is a part of product diversification and strategic position. In FY’23, the Company’s household penetration stood at approximately 89.7% in Bangladesh. Average 3 Yr. sales growth of Health & Beauty segment has shown outstanding performance at 60.7%. Baby category’s owns the second position in terms of CAGR(3Yr) 43.9%. Though, parachute coconut oil has the highest sale about 7,867 million but has somewhat stagnant growth.
The avg. revenue from Parachute Coconut Oil accounted the highest figure BDT 8,576 million in FY’2023 and five years avg. revenue contribution stated at 63.6%. Health & Beauty segment has maintained the significant growth over the last few years. VAHO’s (Value Added Hair Oil) also improved steadily with average 27.4% contribution in revenue.
The average revenue growth of Marico Bangladesh sustained 13% despite macro-economic headwinds affecting consumer sentiment. Last year in FY’23 the revenue increased by 8.5% as against the previous year in FY’22. Gross profit margin came under pressure and decreased slightly from the previous year due to increase COGS notably. Net profit increased by 8.9% compared to the previous year. This growth can be attributed to the MBL’s strategic focus on expanding core product, operational efficiencies and capitalize emerging opportunities.
MBL occupied 6th position (BDT 76,305 million) and 8.1% in the MNC’s market cap. The share of the company has generated 148% holding return over the last 10 years although the scrip remained traded in a long period at floor price as imposed by the BSEC in two tranches.
MBL has a great history of sustainable dividend which may continue in the coming year. The company through its good corporate governance attain the investor’s confidence which demonstrates in it’s stock performance over a long time.