Marico share rallies 9% as Q2 results beat estimates; profit zooms 20% YoY

Marico share price: Shares of fast moving consumer goods (FMCG) company Marico surged as much as 9.30 per cent to hit an intraday high of Rs 687.30 per share on Wednesday, October 30, 2024.

 

The Marico share price rallied after the company posted stronger-than-expected Q2FY25 results, which beat street estimates.

 

In Q2FY25, Marico’s profit rose over 20.3 per cent year-on-year (Y-o-Y) to Rs 433 crore, as against Rs 360 crore in the same quarter a year ago (Q2FY24).

 

The company’s revenue from operations climbed 7.6 per cent annually to Rs 2,664 crore in Q2FY25, from Rs Rs 2,476 crore in the same quarter last year (Q2FY24).

 

 

At the operating front, the earnings before interest, taxes, depreciation, and amortisation (Ebitda) soared 5 per cent annually to Rs 522 crore in the September quarter of FY25, from Rs 497 crore in the September quarter of FY24. 

 

However, Ebitda margin squeezed 50 basis points (bps) Y-o-Y to 19.6 per cen t in Q2FY25 from 20.1 per cent in Q2FY24.

 

During the quarter, demand in India remained stable, with rural growth outpacing urban growth at 2x year-on-year, Marico said in a statement. 

 

The sector saw positive pricing growth as brands increased prices due to rising commodity costs. Domestic revenue reached Rs 1,979 crore, up 8 per cent annually, driven by volume growth and price hikes, particularly in Coconut Oil and Saffola Oils. 

 

Segment-wise show

  The Parachute Rigids achieved 4 per cent volume growth, gaining about 120 bps in market share and 10 per cent revenue growth due to early-year pricing adjustments. The Value-Added Hair Oils declined 8 per cent Y-o-Y but gained about 110 bps in value market share.

  Meanwhile,  foods surged with 28 per cent value growth, crossing Rs 1,000 crore in ARR, boosted by Saffola Oats and new Saffola Masala Millets. The Premium Personal Care brands exceeded Rs 525 crore in ARR, with Beardo performing particularly well.

 

Internationally, Bangladesh grew 8 per cent, and MENA saw a whopping 43 per cent increase. Ebitda margins were 20.1 per cent for the domestic business and 27 per cent internationally. 

 

Outlook

  The company expects demand trends to improve in the second half of the year, supported by favourable monsoon conditions and government investments in rural economies. It aims for double-digit revenue growth and enhanced margins, focusing on market share gains and expansion in Foods and Premium Personal Care sectors, alongside international growth. 

 

What do brokerages say? 

According to Japanese brokerage firm Nomura, Marico guides for double-digit sales growth in FY25F (7 per cent in H1), while OPM to contract by 40-50 basis points Y-o-Y but to improve in FY26 from Project Setu. 

 

Hence, analysts have trimmed FY25F-27F EPS by about 2.5 per cent on our lower OPM outlook. “We value MRCO at a P/E of 50x on Sep-26F EPS (both unchanged) and arrive at a TP of Rs 760 (Rs 780 previously). We maintain our Buy rating and Top Pick status and forecast a 14 per cent EPS CAGR over FY25-27F,” Nomura said.

 

Key risks, they believe, is slower-than-expected demand recovery.

 

Those at Nuvama Institutional Equities said, Marico’s Q2FY25 revenue/Ebitda grew 7.6 per cent/5 per cent Y-o-Y, exactly in line with its estimates. 

 

“Factoring in higher copra and edible oil prices, we are cutting FY25E/26E/27E EPS by 4.2 per cent/5.1 per cent/4 per cent. This yields a revised target price of Rs 740 (earlier Rs 780); maintain ‘Buy’, Nuvama said in a note.

 

At 9:49 AM, Marico shares were trading 7.49 per cent higher at Rs 675.90 per share. In comparison, BSE Sensex was trading 383 points lower at 79,985.90 levels.