Marico slips over 1.5% despite increase in Q3 profit

Shares of Marico fell more than 1.5% on the BSE after the company posted a consolidated net profit at Rs272cr, up 10.6% in Q3FY20, supported by growth in international business.

The company’s net sales declined 2% to Rs1,824cr in Q3FY20.

The company’s consolidated EBITDA grew by 4% to Rs373cr in Q3FY20 as against Q3FY19. EBITDA margin jumped 116 bps to 20.4% in Q3FY20 over Q3FY19. The company further added that benign input costs in the domestic and Bangladesh businesses led to gross margin expansion of 286 bps on a yoy basis.

The India business recorded a volume decline of 1%. While overall category growth rates were muted during the quarter, Marico brands’ offtake grew ahead of the category, resulting in market shares gains across most segments.

The company will focus on reviving sustainable growth in its franchises by redirecting monies from trade promotion towards consumer pricing, investing behind upgrading distribution infrastructure in urban GT and expanding direct reach in rural markets.

“We expect that it will take a couple of quarters for a healthy growth trajectory to materialize through these initiatives on the back of some recovery in the overall demand sentiment,” the company said in a filing to the BSE.

The International business made another positive stride, delivering 10% constant currency growth, led by strengthening momentum in Bangladesh and healthy growth in exports to diaspora and other markets.

Stock view:
Marico Ltd is currently trading at Rs330.90, down by Rs7.1 or 2.1% from its previous closing of Rs338 on the BSE. The scrip opened at Rs344 and has touched a high and low of Rs344 and Rs330 respectively.

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