Marico surges 10%, hits over 7-month high on promising FY25 outlook

Marico stock price hit an over seven-month high of Rs 581.75 as it rallied 10 per cent on the BSE in Tuesday's intraday trade on promising outlook. The stock of the fast moving consumer goods (FMCG) company was trading at its highest level since October 3, 2023, when it had hit a 52-week high of Rs 595.

In the financial year 2023-24 (FY24), the premium and urban-centric segments stayed ahead of the rural and mass segments. Rural sentiment, too, saw revival towards the quarter-end. The management is optimistic about growth revival in FY25 and expects double-digit revenue growth, driven by healthy volume growth.

Amidst the backdrop of improving macro-indicators and forecast of a normal monsoon, Marico's management expects a gradual uptick in the growth of its core categories through the ongoing initiatives to enhance the profitability of its General Trade (GT) channel partners and transformative expansion in the company’s direct reach footprint with the roll out of Project SETU.

"FY24 was a mixed year with sectoral volume growth consolidating on a low base, while commodity and consumer pricing trended lower. While premium and discretionary segments within FMCG continued to witness positive traction, demand trends in mass consumption categories belied expectations of a visible pickup owing to the slower-than-anticipated recovery in rural and urban sentiment, subdued General Trade and resurgence of regional and unorganised competition," Marico said on outlook.

For Motilal Oswal Financial Services, the improvement in rural market, market share gain, accelerated growth in Foods and Premium Personal Care, healthy growth in international business, and the normalisation of price cuts should help Marico deliver better revenue in FY25-26E.

"To improve its distribution reach, Marico has also started 'Project SETU', which helps to drive growth in GT through a transformative expansion of its direct reach. The company has been sustaining double-digit Ebitda growth, a better scorecard for Marico (high commodity sensitive)," the brokerage firm said in a result review report with a 'buy' rating on the stock and a target price of Rs 625 per share.