Shares of FMCG major Marico soared up to 6.56 per cent at Rs 655.70 per share on the BSE in Monday’s early morning trade. This comes after the company posted healthy business updates for the April-June quarter, with demand trends sitting continued growth path.
Consolidated revenue for the company grew in high-single digit in Q1 of FY25 and the management expects it to continue trending upwards through the rest of the fiscal. Gross margin is also likely to expand on-year due to a favorable portfolio mix.
The domestic business also posted a modest uptick in underlying volume growth on a sequential basis. Parachute coconut oil saw low single-digit volume growth, which the management anticipates to be picked up through the rest of the fiscal, supported by signs of an increase in offtake growth.
On the other hand, Saffola Oils delivered mid-single-digit volume growth whereas Value Added Hair Oils (VAHO) had a soft start to the fiscal amid competitive headwinds.
Going by the management’s outlook, Nuvama Institutional Equities stated that Marico maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term. The management aims to deliver this growth by the strengthening brand equity of its core franchises and the scale-up of new engines of growth.
Morgan Stanley also believes that the company’s revenue and volume growth will be see an improvement, driven by higher realisations.
In addition, Nuvama anticipates Marico’s revenue, EBITDA, and volumes to grow by 8 percent, 11 percent, and 3.5 percent on-year respectively furing Q1 FY25.
For Parachute and Saffola, the brokerage sees sales growth of around 9 percent and 7 percent, respectively, driven by a balanced mix of volumes and pricing, while VAH is likely to remain muted, Nuvama stated.
The international segment is expected to perform well, growing by 11% YoY in constant currency terms. The firm also projects gross and EBITDA margins for Marico to expand by 222 basis points and 63 basis points on year, respectively, to 52.2 percent and 23.8 percent, respectively.
At present, the shares of the company are trading at a price to earnings multiple of 73.86 times with an earning per share of Rs 8.33.
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