Fundamental View: Marico Vs Adani Wilmar; Which one to pick for long term?
How do the two leading Fast Moving Consumer Goods (FMCG) companies Marico and Adani Wilmar pit against each other for your money? MintGenie decodes.
Fast-moving consumer goods (FMCG) is the fourth-largest sector in the Indian economy. There are three main segments in the sector, food and beverages, which accounts for 19% of the sector; healthcare, which accounts for 31% of the share; and household and personal care, which accounts for the remaining 50% share.
The urban segment contributes to about 55% of the revenue share, while the rural segment accounts for 45%. The rise in rural consumption will drive the FMCG market. The Indian FMCG industry grew by 36.9% in the second quarter of 2021, despite nationwide lockdowns.
The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220 billion by 2025, from US$ 110 billion in 2020. The Indian processed food market is projected to expand to US$ 470 billion by 2025, up from US$ 263 billion in 2019-20.
Company Overview
Marico
Marico Limited is an Indian multinational consumer goods company providing consumer products and services in the areas of health, beauty and wellness.
Marico had a 23% market share of the International FMCG Business.
Marico is present in over 25 countries across Asia and Africa. It owns brands in the categories of hair care, skincare, edible oils, health foods, male grooming, and fabric care such as Parachute, Saffola, Hair & Care, Parachute Advanced, Nihar Naturals, and Mediker.
During 2020-21, Marico recorded a turnover of INR 80.5 billion (~USD 1.1 billion) through sales in India and other chosen emerging markets of Asia and Africa.
Marico’s focus on delivering sustainable business and earnings growth has so far resulted in a healthy shareholder return of 24% CAGR since listing in 1996.
Adani Wilmar Ltd.
Adani Wilmar, a joint venture between Adani Enterprises Ltd and Wilmar International Ltd, is the owner of the Fortune brand of edible oils. It has the largest range of edible oils comprising soya bean, sunflower, mustard, and rice bran. Its Fortune brand of oil has around 20% market share in India.
Adani Wilmar’s business activities include oil palm cultivation, oilseed crushing, edible oil refining, sugar milling and refining, speciality fat, oleochemical, biodiesel and fertilizer manufacturing and grain processing. It has over 850 manufacturing plants and an extensive distribution network covering China, India, Indonesia and 30 other countries.
Adani Wilmar is the seventh listed Adani group company. Other listed entities include Adani Enterprises, Adani Ports and Special Economic Zones Ltd, and Adani Transmission Ltd.
The listing of Adani Wilmar comes at a time when the group’s billionaire founder Gautam Adani overtook Reliance Industry’s Mukesh Ambani to become the richest Indian, according to the Bloomberg Billionaires Index.
Fundamental view
Marico Vs. Adani Wilmar
Marico Ltd reported a revenue of Rs 8,048 Cr in FY21, which is 10.2 percent higher than the previous year, as well as a 7 percent increase in domestic volume.
Adani Wilmar earned Rs 37,090 Cr in revenue in FY21, a 25.06 percent increase over the previous year.
| Revenue and Expenditure (rs cr) | 2021 | 2020 | 2019 | 2018 | 2017 |
| Adani Wilimar | |||||
| Total Revenue | 37,090.42 | 29,657.04 | 28,797.46 | 26,471.91 | 23,198.36 |
| Total Expenditure | 35,765.10 | 28,347.51 | 27,696.93 | 25,543.64 | 22,544.78 |
| EBITDA | 1,325.32 | 1,309.53 | 1,100.53 | 928.27 | 653.58 |
| EBIT | 1,058.01 | 1,068.26 | 918.64 | 782.56 | 534.74 |
| Profit Before tax | 756.64 | 609.01 | 570.76 | 573.36 | 352.09 |
| Profit After tax | 652.77 | 403.04 | 365.55 | 381.69 | 233.06 |
| Marico | |||||
| Total Revenue | 8,048.00 | 7,315.00 | 7,334.00 | 6,322.00 | 5,917.79 |
| Total Expenditure | 6,460.00 | 5,849.00 | 6,008.00 | 5,189.00 | 4,758.52 |
| EBITDA | 1,588.00 | 1,466.00 | 1,326.00 | 1,133.00 | 1,159.27 |
| EBIT | 1,449.00 | 1,326.00 | 1,195.00 | 1,048.00 | 1,068.97 |
| Profit Before tax | 1,525.00 | 1,374.00 | 1,258.00 | 1,117.00 | 1,149.00 |
| Profit After tax | 1,201.00 | 1,043.00 | 1,132.00 | 827.00 | 811.97 |
Adani Wilmar earned a net profit of Rs 652.77 Cr in FY21 up 61% from the previous year.
Marico posted a net profit of 1,201 Cr in FY21 up 15.1 % from the previous year.
Return Ratios
Ratios can reveal trends in particular industries, creating benchmarks against which the performance of all industry players can be measured. Small businesses can use industry benchmarks to craft organizational strategy and clearly measure their own performance against the industry as a whole.
The return on equity measures the company’s efficiency with which it is able to generate returns compared to the shareholders’ investment. Over the last 5 years, Adani Wilmar has maintained an average ROE of 37.31% compared to Marico who has an average of 20.5%.
Marico Ltd is a dividend-paying company, with a 5-year average yield of 1.63 cents. Adani Wilmar, a newly listed company, has yet to declare a dividend.
| Marico | 2021 | 2020 | 2019 | 2018 | 2017 |
| Return on Equity(%) | 38.69 | 35.03 | 41.25 | 34.1 | 37.51 |
| Return on Capital Employed(%) | 44.85 | 42.58 | 41.99 | 41.81 | 47.47 |
| Earnings per share | 9.09 | 7.91 | 8.64 | 6.31 | 6.19 |
| Dividend yield | 1.82 | 2.46 | 1.38 | 1.3 | 1.19 |
| Adani Wilimar | |||||
| Return on Equity(%) | 22.25 | 17.16 | 18.89 | 24.92 | 19.5 |
| Return on Capital Employed(%) | 23.1 | 26.69 | 26.21 | 21.99 | 17.94 |
| Earnings per share | 6.37 | 4.03 | 3.39 | 3.57 | 2.04 |
Companies’ Future plans
Marico
Marico ltd plans to achieve net-zero emissions in global operations by 2040.
The company will introduce multiple sustainability initiatives across its global operations with a view of curbing greenhouse gas (GHG) emissions and promoting a carbon-neutral business agenda, Marico Ltd said in a statement.
Marico said it also plans to make significant investments in low-carbon innovations and systems to accelerate the decarbonisation of its operational footprint apart from mapping direct and indirect emissions across its operation.
Adani Wilmar
Adani Wilmar's future growth strategy is focusing on value-added products with the launch of edible oil products, rice bran health oil, fortified foods, ready-to-cook soya chunks, khichdi and more.
“The company has a strong raw material base and was one of the largest importers of edible oil in the year 2021.
The company is looking to acquire food brands along with using the amount it raises via its IPO to expand its capacities in food segment.
Note: This article is for educational purposes only. Please speak to a financial advisor before investing.
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