Marico Q3 update: Weaker rural demand dents sentiment; stock drops over 4%; here's what brokerages suggest

Marico share price target, Marico Q3 update: Marico’s consolidated revenue for the quarter ended December 31, 2023 (Q3 FY24) declined in the low single digits on weaker rural demand, while its profit grew in the low double digits due to lower costs of key raw materials.

Marico Q3 update: Copra and edible oil prices remained at lower levels, and crude derivatives also exhibited some downward bias, thereby leading to robust gross margin expansion on a YoY basis. Image: Reuters/ Representational image

Marico share price target, Marico Q3 update: Shares of Marico, which makes personal care products such as Parachute coconut oil, slipped on Monday (January 8) as the FMCG major’s consolidated revenue for the quarter ended December 31, 2023 (Q3 FY24) declined in the low single digits on weaker rural demand, while its profit grew in the low double digits due to lower costs of key raw materials.

Marico shares declined as much as 4.6 per cent to hit the day's low of Rs 520.4 on the NSE in early morning deals.

Marico's domestic volumes grew in low single digits on a year-on-year (YoY) basis, with slight sequential improvement in the core portfolio. Its Saffola brand of cooking oils, one of Marico's biggest brands, recorded an optically weak quarter due to cautious trade sentiment. Parachute coconut oil registered low single-digit volume growth, with loose-to-branded conversions trending positively.

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Copra and edible oil prices remained at lower levels, and crude derivatives also exhibited some downward bias, thereby leading to robust gross margin expansion on a YoY basis.

Marico's international business delivered mid-single-digit constant currency (CC) growth amid transient macro headwinds in the Bangladesh market, while the rest of the geographies held strong, the company said.

Consumer goods company Marico, which flagged weaker rural demand due to the impact of higher inflation, reiterated that the trend has still not changed, with rural "offering little to cheer."

"In addition, constraints on liquidity and profitability in the general trade (GT) channel remained an overhang for the sector, while alternate channels continued to fare well," the company said in its regulatory filing.

"We remain optimistic of a gradual uptick in consumption trends over the next calendar year on the back of improving macro-economic indicators, continued government spending, and conducive consumer pricing across categories in response to a benign input cost environment," the company added in its regulatory filing.

Marico share price target

Post the update, here's the revised targets by the brokerage:

Marico
Brokerage	Rating	New Target (INR)
CLSA	Sell	524
JP Morgan	Neutral	550
Morgan Stanley	Equalweight	553
Citi	Buy	610
Nomura	Neutral	600
Macquarie	Outperformance	610

What does Marico do?

Marico is among the country's leading consumer product companies in the global beauty and wellness space.

During FY 2022–23, Marico recorded a turnover of Rs 97.6 billion through its products sold in India and chosen markets in Asia and Africa, according to its official release on exchanges.

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Marico Q3 Update