Marico's Q4: Volume Up by 3%; Gross Margin Expands 400+ Basis Points

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Marico's Q4: Volume Up by 3%; Gross Margin Expands 400+ Basis Points

Team FS

06/May/2024

Key Points:

Marico Ltd. maintains steady growth with a 3% volume increase, meeting market expectations.
Quarterly revenue reaches ₹2,278 crore, with promising signs of growth in both domestic and international sectors.
Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) see a notable rise, showcasing the company's resilience amidst economic fluctuations.

In the tumultuous landscape of today's stock market, Marico Ltd. emerges as a beacon of stability and resilience. The consumer goods giant's recent performance in the January-March quarter has not only met market expectations but has also provided promising indicators for future growth. Let's delve into the highlights of Marico's quarterly report and understand why it's catching the attention of investors and analysts alike.

Steady Growth in Volume and Revenue:
Marico Ltd. kicked off the year with a commendable 3% growth in volume, aligning perfectly with its estimated range of 2% to 3%. This robust volume growth sets a positive tone for the company's performance in the coming quarters. Additionally, the company reported quarterly revenue of ₹2,278 crore, slightly surpassing estimates by ₹3 crore. Despite challenges posed by the ongoing economic uncertainties, Marico managed to achieve a year-on-year revenue increase of 1.7%, showcasing its resilience and adaptability in the face of adversity.

Optimistic Outlook and Strategic Initiatives:
In its quarterly business update, Marico expressed confidence in the upward trajectory of its consolidated revenue growth. The company anticipates a shift towards higher revenue growth, with domestic revenue leading the charge in the forthcoming quarters. This optimistic outlook is bolstered by stable prices of edible oil and crude oil derivatives, paving the way for strong gross margin expansion on a year-on-year basis. Marico's strategic focus on enhancing operational efficiency and strengthening market presence positions it favorably to capitalize on emerging opportunities in the consumer goods sector.

Financial Performance and Market Response
Despite a marginal deviation from market expectations, Marico's financial performance remains robust. The company reported a net profit of ₹320 crore for the quarter, slightly lower than the polled estimate of ₹337 crore. However, Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) witnessed a noteworthy increase of 12.5% compared to the previous year, reaching ₹442 crore. This growth in EBITDA, coupled with an expansion in EBITDA margin by nearly 200 basis points, underscores Marico's efficiency in managing costs and optimizing operational performance.

Domestic and International Expansion
Marico's India business, while remaining flat on a year-on-year basis in terms of revenue, exhibited a commendable expansion in EBIT by 12.3% to ₹339 crore. On the international front, the company witnessed a 7.4% increase in revenue, reaching ₹598 crore. The growth in both domestic and international segments reflects Marico's ability to leverage its diverse portfolio and capture market opportunities across geographies. With a strategic focus on innovation, brand building, and market penetration, Marico continues to strengthen its foothold in both domestic and international markets.

Market Response and Future Prospects
In response to its steady performance, shares of Marico ended 2.9% higher on Monday, closing at ₹531.85. While the stock has seen a marginal decline of 2% so far in 2024, it has remained relatively stable over the past 12 months. This indicates investor confidence in Marico's ability to navigate through market volatility and deliver consistent returns. Looking ahead, Marico remains poised for growth, driven by its robust business fundamentals, strategic initiatives, and resilient operational performance.

Conclusion
Marico Ltd.'s steady performance amidst market volatility reaffirms its position as a stalwart in the consumer goods sector. With promising signs of growth in both domestic and international segments, coupled with strategic initiatives aimed at enhancing operational efficiency and market presence, Marico is well-positioned to capitalize on emerging opportunities in the dynamic business landscape. As investors and analysts continue to monitor its trajectory, Marico's commitment to innovation, sustainability, and value creation remains unwavering, underscoring its status as a market leader with a vision for the future.

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Marico's Q4: Volume Up by 3%; Gross Margin Expands 400+ Basis Points

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