Marico Limited, a leading consumer goods company, experienced a significant stock surge of over 6% on July 8, driven by a strong business update for the April-June quarter of fiscal year 2025 (Q1 FY25). This surge reflects positive investor sentiment and confidence in the company's growth trajectory and strategic initiatives.

Financial Performance Overview 
At 09.53 am on the National Stock Exchange (NSE), Marico's shares were trading at Rs 654.75. The company reported consolidated revenue growth in the high-single digits for Q1 FY25. The management expressed optimism about maintaining this upward trend for the remainder of the fiscal year, supported by a favorable portfolio mix expected to expand gross margins on a year-on-year basis.

Domestic Market Performance 
In the domestic market, Marico posted modest sequential volume growth. Parachute coconut oil, one of Marico's flagship products, experienced low single-digit volume growth. However, the management anticipates this growth to accelerate as offtake increases. Saffola Oils, another core product, delivered mid-single-digit volume growth, showcasing strong consumer demand. On the contrary, Value Added Hair Oils (VAHO) had a slower start to the fiscal year due to competitive pressures.

Management's Strategic Outlook 
According to Nuvama Institutional Equities, Marico is committed to achieving sustainable and profitable volume-led growth over the medium term. The company's strategy involves enhancing brand equity for its core franchises and scaling up new growth drivers. This approach aims to balance volume growth with pricing strategies, ensuring long-term profitability.

Brokerage Insights and Projections 
Nuvama Institutional Equities projects Marico's revenue, EBITDA, and volumes to grow by 8%, 11%, and 3.5% year-on-year respectively in Q1 FY25. For Parachute and Saffola, the brokerage expects sales growth of around 9% and 7%, driven by a balanced mix of volumes and pricing. However, VAHO is anticipated to remain muted due to ongoing competitive challenges.

International Segment Performance 
Marico's international segment is projected to perform robustly, with an expected year-on-year growth of 11% in constant currency terms. This strong performance in international markets highlights Marico's diversified growth strategy and its ability to capture opportunities beyond the domestic market.

Margin Expansion 
The brokerage firm also forecasts significant margin expansion for Marico. Gross margins are expected to increase by 222 basis points to 52.2%, while EBITDA margins are projected to grow by 63 basis points to 23.8% year-on-year. This margin expansion is attributed to a favorable portfolio mix and efficient cost management.

Conclusion 
Marico's impressive performance in Q1 FY25 and its strategic initiatives for sustained growth have positioned the company favorably in the market. The strong business update and positive outlook have bolstered investor confidence, reflected in the significant stock surge. As Marico continues to strengthen its core brands and explore new growth avenues, it remains well-poised for long-term success in the competitive consumer goods sector.

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