With healthy 15% volume growth, Marico continued the growth momentum across categories. Saffola saw fifth consecutive quarter of double digit volume growth at 17%. Parachute & VAHO witnessed 8% & 21% volume growth primarily due to low base quarter numbers & renewed traction from rural regions. Foods category which includes Oats, Honey & newly launched Chyawanprash & Soya Chunks saw 74% revenue growth during the quarter. The category has seen splendid growth in last three quarter with the consumption trends towards healthier food. Overall business witnessed a revenue growth of 16.3% to Rs. 2122 crore. With the 26% increase in copra prices, 28% increase in rice bran oil prices, gross margins contracted 223 bps. Further employee spends to sales also increased 61 bps mainly on account of inclusion of Beardo's workforce after the full integration. The savings in overhead spends & marketing cost by 81 bps & 105 bps respectively restricted the operating margin contraction by 99 bps to 19.5%. Operating profit grew 10.7% to Rs. 413 crore. Led by higher operating profit & lower interest cost, net profit grew by 13% to Rs. 312 crore.
Valuation & Outlook
We believe both mature as well as emerging categories are likely to witness strong growth in medium term with no major inflationary headwinds. Moreover, scaling up of foods has created long term growth lever. We maintain BUY rating with revised target price of Rs. 490/share (earlier Rs. 440).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Marico_Q3FY21.pdf
Shares of MARICO LTD. was last trading in BSE at Rs.411.9 as compared to the previous close of Rs. 412.5. The total number of shares traded during the day was 130168 in over 3710 trades.
The stock hit an intraday high of Rs. 415.6 and intraday low of 403.5. The net turnover during the day was Rs. 53282788.