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Recommendations India

Marico 1QFY2015 performance highlights and results update

August 5, 2014, Tuesday, 13:09 GMT | 08:09 EST | 17:39 IST | 20:09 SGT
Contributed by Angel Broking


For 1QFY2015, Marico has delivered a strong set of numbers, both on the top-line and bottom-line front. The growth has come on the back of strong performance of the domestic as well as the international businesses.

Key highlights of the quarter: The company’s consolidated top-line for the quarter rose by 17.4% yoy to Rs.1,623cr. Adjusted for the now demerged Kaya business, the top-line growth stood at 25.3%. The company’s India FMCG business grew by 28%, aided by a 6.5% volume growth and price hikes taken by the company across its portfolio. The company’s international businesses posted a revenue growth of 16% during the quarter with a constant currency growth of 9.6% yoy. The OPM contracted by 19bp yoy to 16.4% owing to gross margin contraction by 636bp yoy (due to increase in copra prices). However, the company has reported a healthy growth in operating profit of 16.1 yoy to Rs.267cr due to price hikes. The company’s bottom-line rose by 17.5% yoy to Rs.185cr due to increase in operating profit, higher other income, and lower interest costs, yoy.

Outlook and valuation: Going ahead, we expect Marico to post a healthy growth in its domestic business, aided by its strong brands. The recent acquisitions made by the company too are expected to fuel growth in the future. At the current market price, the stock is trading at 25.5x FY2016E EPS. We recommend a Buy rating on the stock with a target price of Rs.311.

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