Marico in the reckoning

Desi FMCG company, Marico is doing well despite reporting a drop in net profit for Q4FY20. The stock, which had closed yesterday at Rs.284.40, opened today at Rs.291 and went on to an intraday high at Rs.301.65.

Consolidated revenue for the quarter was down 7% (YoY) at Rs.1496 crore on a 3% volume degrowth in domestic business. Net profit fell 51% at Rs.199 crore. Apart from the Covid impact, there was also an exceptional loss of Rs 10 crore - impairment loss towards goodwill arising out of South African Hair styling brand ISO Plus acquired through its subsidiary Marico South Africa (PTY).

EBITDA fell 4% at Rs.282 crore while thanks to the lower raw material, advertising, sales promotion and employee costs, its EBITDA margin was up from 18.27% to 18.85%.

Despite this fall in net profit, the stock remains positive because most of the brokerages remained positive on the stock as they feel that Marico is better placed to emerge from the lockdown impact and the lower costs will help it shore up its margins.