Earnings Outlook
Price hikes to help Marico outperform peers in Jan-Mar
This story was originally published at 22:26 IST on 30 April 2025
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By Simran Rede
MUMBAI - Marico Ltd. is expected to be among the outperformers in the fast-moving consumer goods sector with strong March-quarter earnings, driven by price hikes in key products. Moderate volumes in the core segment, strong growth in the foods and personal care segments, and price hikes in the Parachute and Saffola brands are expected to drive Marico's growth during the quarter. However, hyperinflation in copra and edible oil prices is expected to weigh on the company's margins.
Marico is expected to post a consolidated net profit of INR 3.38 billion for the March quarter, up over 6% on year, according to the average of estimates from 15 brokerages. Sequentially, however, Marico's consolidated net profit is expected to fall over 15%. The highest estimate of INR 3.91 billion for consolidated net profit is from Morgan Stanley, and the lowest estimate of INR 3.03 billion is from Elara Securities (India) Pvt. Ltd.
Marico's revenue is expected to grow by mid-teens, primarily because the company has raised the prices for Parachute coconut oil and Saffola edible oil. The company is expected to post a consolidated revenue of INR 26.30 billion for the quarter, up over 15% on year. Sequentially, the company's consolidated revenue is expected to decline nearly 6%. Equirus Securities Pvt. Ltd. has the highest estimate for consolidated revenue at INR 26.93 billion, while the lowest estimate of INR 22.78 billion was from HDFC Securities Ltd.
The company surprised analysts when it disclosed a high-teens volume growth in the flagship Parachute brand for the March quarter. In contrast, analysts had estimated 2-7% volume growth.
Analysts expect revenue from the Saffola brand to grow in the range of 20-25%, backed by 15-20% price hikes implemented across these portfolios. This is in line with the company's guidance. The value-added hair oils segment is showing signs of gradual recovery in sales, although some brokerages predict a marginal decline.
Sales from the rural market grew at a faster pace than in the urban market, the company had said. Mario is likely to take a price hike of 9-10% for Parachute to negate the sustained rise in copra prices, the primary raw material, Nuvama Institutional Equities said. HDFC Securities, Kotak Institutional Equities, and Nuvama expect Marico's margins to be affected by the steep increase in copra prices. The company's EBITDA margins are expected to be under pressure due to increases in prices of key raw materials, particularly copra and edible oils, Nuvama said. Several brokerages anticipate a contraction in margins, ranging from 120 to 288 basis points year-on-year to 17-20%.
The company's international business is likely to report sales growth in mid-teens in constant currency terms, driven by resilient and broad-based growth across markets, according to analysts. However, currency devaluation in Bangladesh may have a slight negative impact on reported sales growth, HDFC Securities said. Revenue from Bangladesh contributes to 45% of the international business.
Marico is expected to report earnings before interest, taxes, depreciation, and amortisation of INR 4.64 billion for the March quarter, according to the average of estimates from 13 brokerages. The EBITDA is expected to be in the range of INR 4.42 billion to INR 5.21 billion.
Kotak Equities expects the company's EBITDA margin to contract 195 bps on year to 17.5%, while Nuvama sees a 225 bps contraction to 17.2%. The EBITDA margin is expected to decline sharply on the year due to hyperinflation in the copra and edible oil index and high brand-building and distribution spending, according to analysts.
The fast-moving consumer goods company will declare its Jan-Mar financial results on Friday. On Wednesday, shares of Marico closed at INR 710.45 on the National Stock Exchange, down 0.1%. The stock has risen over 8.6% since it detailed its December quarter earnings. In the previous quarter, the company's consolidated net profit had risen 4% on year to INR 3.99 billion, and its revenue had grown 15% on year to INR 27.94 billion.
Following are the Jan-Mar earnings estimates of Marico based on reports from 15 brokerage houses in descending order by the estimate of net profit
Brokerage firm | Net sales(in INR million) | Net profit(in INR million) | EBITDA(in INR million) |
Morgan Stanley | 25,570.00 | 3,911.00 | 5,209.00 |
PhillipCapital (India) Pvt Ltd | 26,653.00 | 3,491.00 | 4,667.00 |
Motilal Oswal Financial Services Ltd | 26,821.00 | 3,441.00 | 4,749.00 |
IIFL Capital Services Ltd | 26,208.00 | 3,436.00 | 4,777.00 |
Kotak Institutional Equities | 26,661.00 | 3,421.00 | 4,658.00 |
Anand Rathi Share and Stock Brokers Ltd | 26,653.00 | 3,401.00 |
N.A. |
Sharekhan Ltd | 26,610.00 | 3,400.00 | N.A. |
JM Financial Institutional Securities Pvt Ltd | 26,649.00 | 3,398.00 | 4,621.00 |
Nirmal Bang Equities Pvt Ltd | 26,888.00 | 3,339.00 | 4,589.00 |
Systematix Shares and Stocks (India) Ltd | 26,643.00 | 3,312.00 | 4,468.00 |
Nuvama Wealth Management Ltd | 26,534.00 | 3,311.00 | 4,551.00 |
Prabhudas Lilladher Pvt Ltd | 26,502.00 | 3,294.00 | 4,551.00 |
Equirus Securities Pvt Ltd | 26,928.00 | 3,291.00 | 4,623.00 |
HDFC Securities Ltd | 22,780.00 | 3,180.00 | 4,420.00 |
Elara Securities (India) Pvt Ltd | 26,350.00 | 3,028.00 | 4,498.00 |
Average | 26,296.67 | 3,376.93 | 4,644.69 |
End
Edited by Ashish Shirke
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