Marico Q3 Business Hit By Slowing Consumption Patterns; Stock Fell
Shares of Marico Limited on Wednesday plunged 2.34% in intraday session to a low of Rs 498.2 on BSE following the company posting its business update for the October-December quarter of 2021.
The stock opened the market 1.38 percent lower at Rs 507 from its previous close of Rs 514.05 on BSE. With a market cap of Rs 66,231.46 Cr, the shares stand below 5 day, 20 day, 50 day, 100 day and 200-day moving averages.
The company in BSE notice said, "The quarter was characterized by slowing consumption patterns which affected the sector as a whole. This was mainly due to continuing inflation impacting overall disposable incomes as well as rising mobility unleashing some degree of pent-up demand for discretionary goods, services and out-of-home consumption.”
The consumer goods company added that rural demand was flat, albeit optical to an extent, given the high base. Revenue growth in the reporting year came in double digits, while volumes fell flat due to weaker consumption sentiment and a strong base.
Notably, Inflationary gauge Consumer Price Index jumped to 4.91 per cent in November, exceeding the Reserve bank of India’s medium-term target of 4 percent.
Highlights of the quarter :
Parachute coconut oil reported a muted quarter on a high base.
In terms of value, value-added hair oils grew more slowly, but on a two-year compound annual rate basis, they posted double digits growth.
In terms of value, the Saffola franchise rose in the high teens, spearheaded by significant growth of over 20% in the foods category, which is on track to hit the Rs 5 billion target in revenues this year.
However, Saffola edible oils volumes fell.
The premium personal care category reported a broad-based double-digit growth.
Digital-first brands, Beardo and Just Herbs aligned with expectations.
"The International business delivered high teen constant currency growth on a healthy base. All markets fared positively, led by Bangladesh and a smart recovery in Vietnam. Among key inputs, copra prices were range-bound for most of the quarter before witnessing correction towards the end of the quarter. Edible oil prices have also started softening, while crude oil prices remained firm," the company said.
The firm forecasts the gross margin to improve sequentially but remain lower on a year-on-year basis. The operating margin is expected to return to the levels of the preceding quarter.
“Marico's Q3 operating numbers seems to be extending Q2 trend with edible oil on declining trend due to high inflation & foods business continuing to grow at more than 20 per cent. We continue to maintain our positive stance in view of the normalisation of inflationary trend in the long run and strong growth in foods, digital-only brands,” brokerage ICICI Securities said in a note.