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

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. 

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

Historical Price Chart

 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.)