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Informist, Monday, Jul 15, 2024

 

By Avishek Rakshit

 

KOLKATA – Gradual improvement in demand conditions, especially in the rural belt, is expected to lead Marico Ltd to post a 9.8% on-year growth in its consolidated net profit at 4.7 bln rupees for the June quarter, according to the average of estimates from 10 brokerages. The consolidated revenue, owing to an uptick in Marico's volume, is expected to grow 7.2% on-year to 26.6 bln rupees, the average of estimates show.

 

On a sequential basis, the company is expected to report a 47.5% surge in net profit growth and a 16.6% rise in its revenue. Marico had reported a consolidated net profit of 4.3 bln rupees and revenues of 24.8 bln rupees in Apr-Jun last year. Its net profit was 3.2 bln rupees and revenue was 22.8 bln rupees in Jan-Mar.

 

Among brokerages, Nuvama Wealth Management Ltd has the highest net profit estimate at 5.5 bln rupees, and YES Securities (India) Ltd has the lowest projection at 4.5 bln rupees. Kotak Institutional Equities has the highest revenue estimate at 27.1 bln rupees, and Emkay Global Financial Services Ltd has the lowest estimate at 25.8 bln rupees.

 

The fast-moving consumer goods company will declare its Apr-Jun financial results on Aug 5.

 

In an update earlier this month, Marico had said its business in India posted a modest uptick in underlying volume growth on a sequential basis. This volume growth was delivered post adjustments in distributor stock levels to enhance their returns on investment and a certain degree of wholesale channel destocking to ensure smoother direct reach expansion through its distribution widening project.

 

The Parachute brand of coconut oil posted low single-digit volume growth in Apr-Jun, but is likely to pick up visibly through the rest of the year given the consistently healthy trends in offtake growth, the company said. The Saffola brand of edible oils delivered mid-single digit volume growth amidst marked stability in input and consumer pricing, Marico said.

 

Value-added hair oils had a soft start to the year due to competitive headwinds persisting at the bottom of the pyramid segment, while the mid and premium segments fared relatively better, Marico said, adding that it is expected that the portfolio will grow from Jul-Sep onwards.

 

The company’s international business delivered double-digit growth in constant currency terms, driven by resilient and broad-based growth across markets, it said.

 

The Mumbai-based company said that the consolidated revenue is expected to grow in high single digits in Apr-Jun, despite the residual impact of pricing cuts in the Saffola oils portfolio and currency headwinds in overseas markets.

 

Among brokerages, Kotak Institutional Equities has factored in a 4% growth in volume and 6.3% growth in revenue for Marico on the back of a soft base. Motilal Oswal Financial Services, too, has estimated a 4% volume growth, but its projections for revenue growth is higher at 8%. Nuvama Wealth Management, on the other hand, estimated a 3% volume growth and 7% revenue growth for the FMCG company.

 

In a note, Kotak Institutional Equities said the company's Parachute brand of hair oil is expected to see a growth of 2% in volume and 8% in value, and the Saffola brand of oils is expected to see a growth of 7% in volume and 3% in value. The value-added hair oils, however, are expected to register a 4?cline in sales.

 

Marico is expected to report earnings before interest, tax, depreciation, and amortisation, or EBITDA, of 6.2 bln rupees, according to the average of estimates from eight brokerages. The EBITDA range, as estimated by sector analysts, is expected to be 6.0-6.4 bln rupees.

 

Among key inputs, copra prices stayed firm in line with forecasts, while edible oil and crude oil derivatives remained rangebound, Marico said in its update, adding that it expects the gross margin to expand on a year-on-year basis owing to a favourable portfolio mix. The operating profit, on the other hand, is expected to grow slightly ahead of revenue, leading to a marginal rise in operating margin on a year-on-year basis, it said.

 

Nuvama Wealth Management expects Marico's gross margins to expand by 202 basis points on year to 52%, whereas the EBITDA margin is seen declining 22 basis points to 23%. However, Kotak Institutional Equities expects the EBITDA margin to expand by 45 basis points to 23.6%, but the gross margin expansion by 110 basis points could be partially offset by higher brand investments

 

Going ahead, Marico expects its consolidated revenue to grow during the current financial year ending March 2025, on the back of an improving trajectory in domestic volume growth and higher realisations due to the favourable pricing cycle in key domestic portfolios.

 

Today, shares of Marico ended 0.44% higher at 652.95 rupees on the National Stock Exchange.

 

Following are the Apr-Jun earnings estimates of Marico based on reports compiled by Informist from 10 brokerage houses:

 

Broker Name	Net Sales (in million rupees)	Net Profit (in million rupees)	EBITDA (in million rupees)
Anand Rathi Share and Stock Brokers Ltd	26,628.00	4,688.00
Emkay Global Financial Services Ltd	25,793.00	4,476.00	6,113.00
Incred Research Services Pvt Ltd	26,921.00	4,594.00	6,296.00
Kotak Institutional Equities	27,071.00	4,696.00	6,395.00
Motilal Oswal Financial Services Ltd	26,179.00	4,615.00	6,341.00
Nirmal Bang Equities Pvt Ltd	26,752.00	4,587.00	6,340.00
Nuvama Wealth Management Ltd	26,505.00	5,475.00	6,083.00
Prabhudas Lilladher Pvt Ltd	26,752.00	4,713.00	6,313.00
Sharekhan Ltd	26,680.00	4,590.00	–
YES Securities (India) Ltd	26,257.00	4,454.00	5,987.00
Average	26,553.80	4,688.80	6,233.50

 

End

 

Edited by Tanima Banerjee

 

 

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