During FY09, Marico reported a healthy 25.4% y-o-y growth in revenues at Rs23.9 billion driven by strong organic growth. While volumes grew by 12% y-o-y, price hikes taken during the year resulted in higher realizations.

International business grew by 43% y-o-y translating in 230bps increase in revenue contribution. Volume growth from hair oils in rigid packs was strong at 17% y-o-y.

Despite firm copra prices, the Parachute brand registered 9% y-o-y volume growth, while Nihar recorded 11% y-o-y growth.

Marico expects its value-added hair oils segment to witness ~12-14% volume growth in FY10 and Parachute brand to continue to register ~6-8% volume growth aided by increasing demand for branded oil.

Skin care business

Kaya skin care business recorded a strong 62.8% y-o-y growth in revenues at ~Rs1.6 billion.

The growth was driven by 18% y-o-y revenue growth from existing clinics and addition of 20 new clinics during the year.

The segment reported a loss of Rs4 million vis-à-vis Rs42 million in FY08. Going ahead, Marico plans to open 12 to 15 new Kaya clinics per year. The company expects this venture to start contributing positively to bottomline during FY10.

Outlook

Armed with a strong brand portfolio, increasing contribution from new businesses like Kaya and international business, we expect Marico to witness 15.6% CAGR in revenues and 20.4% CAGR in net profit over FY09-11.

We believe Marico would maintain its leadership in the hair oil segment driven by its strong brand recall and loyalty. We maintain BUY recommendation on the stock.