Marico gains after announcing strong Q4 results

Marico gained 2.07% to Rs 256.55 at 15:25 IST on BSE after consolidated net profit rose 25.81% to Rs 138.43 crore on 7.19% rise in total income to Rs 1334.59 crore in Q4 March 2016 over Q4 March 2015.

The result was announced during market hours today, 29 April 2016.

Meanwhile, the S&P BSE Sensex was up 11.90 points or 0.05% at 25,615.

On BSE, so far 1.64 lakh shares were traded in the counter as against average daily volume of 2.25 lakh shares in the past one quarter. The stock hit a high of Rs 258.85 and a low of Rs 252.15 so far during the day.

During Q4 March 2016, Marico delivered a healthy volume growth of 10.5%, on the back of 10.5% volume growth in Q3 December 2015. The India business recorded a robust volume growth of 8.4% while the International business posted a constant currency top line growth of 11% (13% on a like-to-like basis).

During the quarter, the company sold the Goa plant property which was non-operational for over two years since the plant was shut. The sale resulted in a gain of Rs 7.50 crore post tax, which is included under other income.

By 2020, Marico aspires to be an admired emerging market MNC with leadership in two core categories of nourishment and male styling in two continents-Asia and Africa. Marico plans to meet this aspiration by seeking to win amongst consumers, trade and talent. Towards this goal of 2020, the company has identified 5 areas of transformation where it will develop top quartile capability, processes and execution excellence. They are Innovation, Go To Market transformation, Talent Value Proposition, IT & Analytics and Cost Management.

The company will aim at a volume growth of 8-10% and a topline growth of 15% in the medium term. In the near term, though, the value growths may be in single digit given the annual deflation in key commodities in core markets. The company will focus on fewer but bigger innovations to create growth engines of the future. Market growth initiatives in core categories and expansion into adjacent categories will be supported by investments in ASP in a band of 11-12% of sales with focus on brand building. In the near term, advertising inputs to remain in the band of 12-13% taking advantage of lower input costs. The company will continue to invest in increasing its direct reach and Go To Market transformation initiatives in all of its key markets. The company is focusing on Digital initiatives in a big way to improve consumer engagement, drive sales through e-commerce for internet savvy consumers and build data Analytics capabilities In FY 2017, there are plans to revitalize the cost management initiatives with specific focus on front-end spend effectiveness.

Operating margin is expected to be maintained in a band of 17-18% over the medium term. The company will focus on deriving synergies from the unification of India and International FMCG businesses. This includes acceleration of cross pollination & portfolio harmonization, talent mobility, supply chain synergies and process harmonization leading to cost arbitrage. In the near term, however, given the soft commodity prices, the margins will witness an upward bias.

Marico is a leading Indian group in consumer products & services in the global beauty and wellness space.

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