Lower input costs, tactical promotions likely to drive Marico stock

Company unlikely to take up price cuts for flagship Parachute brand

After reacting negatively on Thursday to slower growth in the June quarter (Q1) and cautious commentary on near-term demand, the Marico stock gained over 3 per cent to Rs 374 apiece on Friday, while the Nifty FMCG index was flat.

The Street is positive about the earnings outlook in the near term, thanks to lower input cost. This, coupled with valuations, is in favour of the stock, say analysts.

Marico is trading at 37 times its FY21 estimated earnings, which is at an 18 per cent discount to Hindustan Unilever. 

Lower prices of copra, a key raw material accounting for 40-45 per cent