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Marico 3QFY2014 performance highlights and results update

February 4, 2014, Tuesday, 17:09 GMT | 12:09 EST | 21:39 IST | 00:09 SGT
Contributed by Angel Broking

For 3QFY2014, Marico posted a strong 32.3% yoy growth in its consolidated net profit to Rs.135cr, aided by a 273bp yoy increase in OPM to 16.6%. Domestic volume growth stood at 3%.
Key highlights of the quarter: Marico’s 3QFY2014 top-line rose by 3% yoy to Rs.1,198cr. On a like-for-like basis (adjusted for the Kaya business; demerged w.e.f October 17, 2013) the top-line growth stood at 10% yoy. The domestic FMCG business posted a revenue growth of 9%, aided largely by price hikes. Revenue growth of Parachute coconut oil rigid packs, value added hair oil and Saffola stood at 6% yoy, 16% yoy and 7% yoy respectively. The international business posted a revenue growth of 15% (volume growth of 1%) aided by a favourable exchange rate impact of 12%. Constant currency growth for the international business stood at 3% yoy. Marico’s OPM stood at 16.7%, up 273bp on a yoy basis, due to the price hikes taken by the company and despite the steep increase in copra prices (up 78% yoy during the quarter). The demerger of the low-margin Kaya business too aided the expansion of OPM on a yoy basis. The bottom-line rose by 32.3% yoy to Rs.135cr.
Outlook and valuation: Going ahead, we expect Marico to post a healthy growth in the 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 24.9x FY2015E EPS. We maintain our Buy rating on the stock with a target price of Rs.254.