Marico Q3 Results: Profit Rises In Line With Estimates, Stable Input Costs Aid Margin

Marico Ltd.’s third quarter profit rose, in line with estimates, and stability in consumer and raw material prices aided margins.

Consolidated net profit of the maker of Parachute hair oil and Saffola cooking oil rose 9% over the previous quarter to Rs 328 crore in the quarter ended December, according to the company's exchange filing. That compares with the Rs 331.78-crore consensus estimate of analysts tracked by Bloomberg.

On a year-on-year basis, its net profit rose 6% from Rs 310 crore.

Marico Q3 Highlights (QoQ)

• Revenue was down 1% at Rs 2,470 crore, against the Rs 2,527.26 crore forecast. On a year-on-year basis, it was up 3%.

• Operating profit rose 5% to Rs 456 crore, compared with the estimated Rs 467.86 crore.

• Margins stood at 18.5% versus 17.3%, in line with estimates.

• Advertising and promotion spend at 8.9% of sales, was up 3%.

With retail inflation easing month-on-month, the country's fast-moving consumer goods sector recorded its lowest volume decline in the last five quarters at 0.3%, according to NielsenIQ India estimates.

For Marico, the underlying domestic volume growth in Q3 was 4%. The impact of pack size reductions in the value-added hair oil franchise on domestic volume growth was about 100 basis points.

Domestic revenue was at Rs 1,851 crore, up 1.87% year-on-year and 2.4% sequentially, lagging volume growth due to varying pricing interventions across portfolios during the year, the company said in a statement.

The international business sustained its growth momentum with constant currency growth of 8%. amidst macroeconomic uncertainty and currency devaluation headwinds.

"The quarter was characterised by improving trends in topline and earnings growth as the domestic business witnessed emerging signs of a gradual demand revival, while the international business stood its ground amidst macro headwinds in some markets," said Marico's managing director and chief executive officer, Saugata Gupta. "As the operating environment is expected to evolve favorably, we will aim to maintain an upward trajectory across growth parameters in the quarters ahead through consistent investment in our brands and a focus on execution."

Among the sales channels, the company said, general trade declined in the mid-single digits, with rural still behind urban.

"Prominent green shoots in rural areas are eagerly awaited as an encouraging winter crop-sowing season, indications of higher farm income, and continued government stimulus bode well," Gupta said.

Shares of Marico closed 1.22% lower on Friday compared with the benchmark Nifty50's 1.38% gain.

(Corrects an earlier version that incorrectly said profit missed estimates)