Marico rises 4% on healthy Q1 business update, positive mgmt commentary- Grow Mudra

Marico rises 4% on healthy Q1 business update, positive mgmt commentary

08 Jul , 2024 By : Debdeep Gupta

Shares of Marico rose over 4 percent on July 8 after the company posted a healthy business update for the April-June quarter, with demand trends sitting on a continued growth path.

At 09.31 am, shares of Marico were trading at Rs 635.40 on the NSE.

Consolidated revenue for the company grew in high-single digit in Q1 of FY25 and the management expects it to continue trending upwards through the rest of the fiscal. Gross margin is also likely to expand in the year due to a favorable portfolio mix.

The domestic business also posted a modest uptick in underlying volume growth on a sequential basis. Parachute coconut oil saw low single-digit volume growth, which the management anticipates to be picked up through the rest of the fiscal, supported by signs of an increase in offtake growth.

On the other hand, Saffola Oils delivered mid-single-digit volume growth whereas Value Added Hair Oils (VAHO) had a soft start to the fiscal amid competitive headwinds.

Going by the management's outlook, Nuvama Institutional Equities stated that Marico maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term. The management aims to deliver this growth by the strengthening brand equity of its core franchises and the scale-up of new engines of growth.

Morgan Stanley also believes that the company's revenue and volume growth will be seen as an improvement, driven by higher realizations.

In addition, Nuvama anticipates Marico's revenue, EBITDA, and volumes to grow by 8 percent, 11 percent, and 3.5 percent on-year respectively during Q1 FY25.

For Parachute and Saffola, the brokerage sees sales growth of around 9 percent and 7 percent, respectively, driven by a balanced mix of volumes and pricing, which is likely to remain muted, Nuvama stated.

The international segment is expected to perform well, growing by 11% YoY in constant currency terms. The firm also projects gross and EBITDA margins for Marico to expand by 222 basis points and 63 basis points on the year, respectively, to 52.2 percent and 23.8 percent.