Shares of Marico hit a new high of Rs 442.95, surging 8 per cent on the BSE, in the intra-day trade on Monday after the company posted a 25 per cent volume growth with healthy growth in Parachute & value added hair oils (VAHO) on the back of a low base quarter. Saffola and foods business also continued the growth momentum. The stock of the personal products surpassed its previous high of Rs 439 touched on February 24.
In January-March 2021 quarter (Q4FY21), Marico's revenue swelled by 34.5 per cent to Rs 2012 crore led by a 25 per cent volume growth in India business and a 23 per cent growth in international business (constant currency). Operating profit also increased 13.1 per cent to Rs 319 crore while operating profit margins contracted 300 basis points (bps) to 15.9 per cent during the quarter. Led by strong growth in operating profit, net profit witnessed a growth of 12.9 per cent to Rs 227 crore. Gross margin was down 517 bps owing to the severe input cost pressure, as pricing interventions in the core portfolios were not commensurate to the inflation.
As macroeconomic indicators signaled some positivity for most of the quarter, the company witnessed strong momentum in each of the core portfolios of the India business while steadily strengthening its play in Foods through innovation. "However, a part of the optical growth was also due to a lockdown-affected base (however relatively stronger than most sectoral peers) and partial normalization of the historical skew in Q4 and Q1 revenues. Rural continued to lead the way in traditional trade, growing at 1.8x of urban. Ec0m and CSD also fared well, while Modern Trade dipped due to pantry loading in the base quarter," Marico said in a press release.
Analysts at ICICI Securities believe tailwind of healthier food consumption is expected to grow the foods & Saffola business in the next two to three years. Moreover, hair oils categories are also expected to witness strong growth with a mix of volumes and price hikes. "It is also clear that Marico is looking to gain volumes and market share by not tinkering with prices too frequently," the brokerage firm said in result update.