Marico down 4.5%

Marico yesterday evening published its quarterly update for 30th September, 2023 where it indicated that rural recovery was still quite static, like seen in Q1FY24 due to rising food prices and below-normal rainfall distribution. The company though said that consumption trends, particularly in rural, are expected to improve in H2 owing to retail inflation levels staying within RBI’s target range, hike in MSPs, healthy sowing season, easing liquidity pressures and government spending. I

Due to this, Marico said that domestic volumes grew in low-single digits on a year-on-year basis, with low single digit volume growth in Parachute Coconut Oil and Saffola Edible Oils, and low single-digit value growth in Value Added Hair Oils. Newer portfolios, Foods and Premium Personal Care (including Digital-First), remained on course to achieve full year aspirations.

The International business delivered double-digit constant currency growth.

Consolidated revenue was marginally lower on a year-on-year basis, dragged by pricing corrections in key domestic portfolios over the last 12 months, which will progressively come into the base going ahead. Moreover, currency depreciation in some of the overseas markets had an adverse effect on the reported INR growth in the international business.

Among key inputs, copra and edible oil prices stayed in a favourable range, although the latter continued to exhibit some volatility. Crude derivatives remained firm with an upward bias.

Looking ahead, the company expects robust gross margin expansion on a year-on-year basis and a healthy operating profit margin expansion leading to low double-digit operating profit growth. Marico expects to maintain an improving trend across key performance parameters in H2, supported by a gradual pickup in volume and topline growth in the domestic business and healthy momentum in the international business, while the full-year margin guidance remains intact.

The market does not seem to be too convinced about the guidance as of now, which is why Marico is currently the top loser on the BSE. The stock opened 2% lower at Rs.557.95 and went down further by 4.5% to an intraday low at Rs.543.90.