Marico Share Price Soars Over 10% On Strong Q4 Results: Analysts Bullish on Future Prospects

Marico, a leading FMCG player, jumped over 10% in early trade on Tuesday. This remarkable uptick came in the wake of analysts expressing bullish sentiments following the company's Q4 results announcement.

On the Bombay Stock Exchange (BSE), Marico shares surged by 9.20% to reach Rs 579.30, while on the National Stock Exchange (NSE), the stock rose by 9.33% to Rs 579.75.

The company reported a consolidated net profit of Rs 320 crore in the fourth quarter of FY24, marking a notable growth of 4.9% compared to the year-ago period. Despite economic challenges, Marico showcased resilience, with its revenue from operations in Q4 FY24 rising by 1.69% year-on-year to reach Rs 2,278 crore. The domestic business witnessed a 3% underlying volume growth, while the international business showcased a robust constant currency growth of 10%.

"Saffola edible oil volumes grew c.6% year over year, while sales would have declined c.16%. Despite a favourable base, the VAHO segment saw yet another tepid quarter (-7% yoy), as growth in the mid- and premium segments was offset by a muted performance in lower-priced amla hair oils. Growth rates for saffola edible oil will normalise gradually after accelerated growth in FY21 and FY22 and sharp price hikes in FY23. VAHO growth rates are expected to pick up in FY25, subject to an improvement in macro conditions, Equirus Securities said.

One of the key highlights was the impressive expansion in EBITDA, which increased by 12.5% to Rs 442 crore. Additionally, the EBITDA margin saw a notable improvement, expanding by 190 basis points to 19.4%.

Analysts at Nuvama Institutional Equities noted that Marico's Q4FY24 revenue and EBITDA were in line with their estimates. They expressed optimism, suggesting that the worst may be behind Marico, driven by early signs of rural revival, favorable rainfall predictions, and strategic pricing actions such as a 6% hike in Parachute prices to offset higher copra costs.

"We admire Marico's focus on long-term volume growth and market share gains, which management has followed for several years. Despite focusing on market share, the corporation reduced profitability," Nuvama Equities said.

Marico's long-term strategy includes enhancing its presence in the General Trade channel through initiatives like Project SETU. By aiming to expand its reach to 1.5 million outlets by FY27, backed by strategic investments, Marico aims to drive market share gains, especially in urban and rural areas, while also focusing on diversification and premiumization in its domestic business.

Furthermore, Marico emphasized the growth potential of its mid and premium segments, particularly value-added hair oils, which have shown resilience amid market challenges. The company also expressed confidence in its foods portfolio, projecting it to double in scale by FY27, with a potential CAGR of over 20%.

Marico's robust Q4 performance and promising future outlook have sparked investor optimism, with analysts bullish on the company's growth trajectory. With strategic initiatives in place and a focus on innovation and market expansion, Marico appears poised for sustained growth in the foreseeable future.

Under the labels Hair Code, Nihar Uttam, Cavil, Black Chic, Livon, Revive, Mediker, Nihar Naturals, Hair & Care, Saffola, Parachute, Hercules, Code 10, Set Wet, and Parachute Advanced, Marico provides manufacturing and marketing services for its goods. It uses modern trade, e-commerce, and retail locations to sell its goods.