More Stories

Informist, Tuesday, Jan. 28, 2025

By Steffy Maria Paul

MUMBAI – Parachute oil-maker Marico Ltd. is expected to be among the outperformers in the fast-moving consumer goods sector when it reports its December quarter earnings on Friday. Stable volumes in the core segment, strong growth in the foods and personal care segments, and price hikes taken in the Parachute and Saffola brands are expected to drive Marico's growth in the recently concluded quarter. However, hyperinflation in copra and edible oil prices are expected to weigh on the company's margins.

For the December quarter, the consolidated net profit of the fast-moving consumer goods company is seen rising 4% on year to INR 3.99 billion, according to an average of estimates by 14 brokerages. The estimates for net profit range from INR 3.76 billion by Elara Securities (India) Pvt. Ltd. to INR 4.33 billion by Motilal Oswal Financial Services Ltd. 

Marico's consolidated net sales are expected to rise 13% on year to INR 27.45 billion, the estimates showed. The lowest estimate for the top line was INR 26.71 billion by Kotak Institutional Equities, while the highest was INR 27.93 billion by Motilal Oswal. Sequentially, the net profit is seen falling 5.6%, while net sales may rise 3%.

The consolidated business delivered mid-teen revenue growth during the quarter and stayed on course to meet the double-digit growth expectation on a full-year basis, Marico had said in its quarterly update. The company's international businesses delivered broad-based mid-teen growth in constant currency during the quarter.

Its Parachute coconut oil reported low-teen growth in revenues during the quarter on account of pricing interventions, Marico had said. The company has taken another round of price hikes in the brand towards the end of this quarter as copra prices remained firm. Its Saffola line-up of edible oils reported high-teen revenue growth in the quarter. The value-added hair oils segment of the company declined marginally owing to competitive headwinds in the base income segment, although the healthier trajectory in the mid and premium segments aided a gradual recovery compared with the previous quarter.

HDFC Securities expects the company's volumes in the domestic business to grow in the mid-single digits due to market share gains in the Parachute brand and scaling up of new businesses. The revenue from the domestic business is seen growing in double digits during the quarter on account of the price hikes taken in the Parachute and Saffola Oils brands, the brokerage said. Kotak expects volumes of the Parachute brand to rise 4% on year and that of the Saffola Oils brand to grow 2% on year during the quarter.

Among key inputs, copra prices remained firm at higher-than-expected levels and vegetable oil prices moved up during the quarter, while crude oil derivatives remained range-bound, Marico had said. The rise in input costs coupled with the company's continued investment in brand building is expected to lead to a higher-than-expected contraction in gross margin during the quarter. 

The company is expected to report earnings before interest, tax, depreciation, and amortisation of INR 5.35 billion for the December quarter, according to the average of estimates from 12 brokerages. The EBITDA is expected to be in the range of INR 5.15 billion to INR 5.80 billion. Brokerages expect the company's EBITDA to rise 4-5% on year during the quarter. For the quarter, Kotak Institutional Equities expects the company's gross margin to decline 150 basis points on-year to 49.8% and its EBITDA margin to contract 105 bps on-year to 20.1%. 

The outlook on the company's edible oil, value-added hair oil, and foods and direct-to-consumer segments would be key monitorables, brokerage firm Systematix Shares and Stocks (India) Ltd. said. 

Marico will detail its earnings for the December quarter on Friday. On Wednesday, shares of the company closed at INR 671.85 on the National Stock Exchange, up 1.2%. The stock has risen 3.2% since it detailed its September quarter earnings. During the previous quarter, the company's net profit had risen 20% on year and its revenue had grown 7.6% on year. Of the 16 brokerage reports on the company available with Informist, 14 have a 'buy' or equivalent rating on the stock while two have a 'hold' or equivalent rating. 

Following are the Oct-Dec earnings estimates for Marico based on reports from 14 brokerage firms in descending order of net profit estimate (in INR million):

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.