Marico’s Q3 operating profit to be modest amid lower revenue growth, company tells in quarterly update; Nomura maintains Neutral stance

The stock has outperformed Nifty50 by 1.7 per cent, giving returns of 2.3 per cent versus 0.6 per cent returned by the broader market index. Source: Freepik

Marico Q3 Result: Consumer products company Marico will see a modest growth in October-December operating profit, hit by lower revenue growth, the company said in its filing to exchanges. Improvement in sequential and year-on year gross and operating margins comes on heels of some stability in key input prices and consumer pricing across key franchises, the exchange filing said.

The Mumbai-headquartered company informed about its operating performance and demand trends over the quarter ended 31 December, 2022.

A detailed earnings performance will be presented after company’s board approves the financial results for Q3FY23.
Brokerage firm Nomura maintains a ‘Neutral’ rating on this stock citing invisibility of rural demand. It set price target at Rs 590. The recommendation was made at Rs 506.

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Marico: Technical View

The stock has emerged from an inverse Heads and Shoulder pattern, technical analyst Nilesh Jain said. He recommends a buy on decline with a near term and positional term view. He set a target of Rs 530.

The counter has a neckline resistance at this level and when this level is breached an upside of Rs 580 will open in this stock, he further added.

Jain, who is Assistant Vice President - Lead Derivative and Technical Research at Centrum Broking, recommends a stop loss at Rs 500. The buying range is Rs 510-Rs 520.

The stock has outperformed Nifty50 by 1.7 per cent, giving returns of 2.3 per cent versus 0.6 per cent returned by the broader market index.

Intraday Price Movement

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Source: NSE

Marico Operating Performance Summary

-- Consolidated revenue in the quarter grew in low single digits on a year-on-year basis.

-- India business marked a slight improvement over the preceding quarter; posts a mid-single-digit volume growth.

-- Parachute Coconut Oil posted low single-digit volume growth after a visible recovery in December as consumer pricing stabilised with copra prices firming up in the off-season.

-- Saffola franchise grew in double digits in value terms with Saffola Oils posting low teen volume growth.

-- Foods continuing its strong run towards the stated revenue aspiration.

-- Premium personal care, on the other hand, witnessed double-digit growth in line with sectoral trends.

Overseas Business

--The International business continued its healthy growth momentum with high single-digit constant currency growth, even while contending with implications of currency depreciation and high inflation in key markets.

-- Bangladesh held steady despite challenging macros, while the other markets performed well.

Marico Outlook

-- Parachute - Going forward, analysts expect the brand to deliver growth in line with medium term aspiration.

-- Acquisition of female personal care brands Purité de Prôvence and Ôliv, will provide a fillip to the Vietnam business.

Head Winds

-- Value Added Hair Oils had a subdued quarter, which was mainly a reflection of tepid sentiment in rural and mass personal care categories.

Sector View

-- FMCG sector has witnessed some improvement in demand, which was more visible in specific categories buoyed by the festive fervour and oncoming winter season.

-- Urban and premium categories maintained their steady pace of growth.

-- Recovery in rural demand was not as discernible as retail inflation stayed at elevated levels.

-- Easing of commodity inflation, higher crop realisations, ongoing government interventions and likely stimulus from the upcoming Union Budget augurs well for the sector in the forthcoming calendar year.

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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