Marico Q1 profit rises 17.2% to Rs267.9 crore


Mumbai: Packaged consumer goods company Marico Ltd reported a 17.2% jump in net profit to Rs.267.9 crore for the quarter ended 30 June, benefiting from lower commodity prices.

Sales of Marico, maker of Saffola and Parachute oil, during the first quarter of the fiscal year increased 0.6% from a year ago to Rs.1,754 crore, the company said in a statement on Friday.

However, even as the overall sales growth was flat, the company recorded an overall volume growth of 8%. Volume growth for the domestic business also came in at 8% for the June quarter.

Analysts had estimated consolidated net profit at Rs.273.70 crore and net sales at Rs.1,872.60 crore, according to a Bloomberg survey.

“Marico sales, operating profit and net profit came in line with our expectations, driven by 8% year-on-year volume growth which in our view is strong (ahead of most staples in this quarter),” said Abneesh Roy, senior vice president, institutional equities and research analyst, Edelweiss Securities Ltd, while noting that the stock has seen a significant run-up over the last few months on the back of a strong set of numbers witnessed in the last couple of quarters.

He said that the stock could see some corrections, but added that considering the strong volume trends and margin trajectory, coupled with a strong outlook driven by a good monsoon and likely pick-up in discretionary spends due to the seventh pay commission payout, valuations would remain rich.

Net profit of the domestic business increased 29% to Rs.234.9 crore while revenue increased 0.5% to Rs.1,450.1 crore.

Marico, which participates in the Rs.2,500 crore branded coconut oil market through its Parachute and Nihar brands, saw volume growth for Parachute at 7%, better than the 6% growth seen in the preceding quarter. Volume growth for Saffola was strong at 11%.

“Q1 was satisfactory with decent broad-based volumes and earnings growth across most of the franchises and business units despite a deflationary situation,” said Saugata Gupta, chief executive officer, consumer products business at Marico.

Gupta said he is looking forward to higher volume growth in the second quarter, at about 10%, with a pick up in rural growth, seventh pay commission payout and low inflation. “The December quarter will not see much situational improvement,” he added.

Speaking on GST, Gupta said that the company will be ready for the reform, adding that it has already got a blueprint prepared for the same.

On Friday, Marico shares closed 0.15 higher at Rs.295.20 apiece on BSE, while the benchmark Sensex rose 1.31% to 28,078.35 points.