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Last Updated : Oct 29, 2013 12:47 PM IST | Source: CNBC-TV18

Marico Q2 PAT seen up 26.5%, volume growth may be sluggish

Volume growth, which is the key for any FMCG company, is expected to largely remain sluggish in the quarter gone by. Analysts expect volume growth of 8 percent, which is not a price-led growth. Infact volume growth could surprise on the downside, feel analysts.

 
 
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FMCG major Marico will announce its second quarter (July-September) results today. According to a CNBC-TV18 poll, analysts on an average expect consolidated profit after tax of the company to grow 26.5 percent year-on-year to Rs 109 crore during the quarter.


Total income is seen going up by 10 percent to Rs 1,276 crore in three months period ended September 2013 from Rs 1,159 crore in a year ago period.


Volume growth, which is the key for any FMCG company, is expected to largely remain sluggish in the quarter gone by. Analysts expect volume growth of 8 percent, which is not a price-led growth. Infact volume growth could surprise on the downside, feel analysts.


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Its flagship brand Saffola is expected to post robust volume growth of around 10 percent Y-o-Y on the back of favourable base (6 percent in a year ago period) and promotions while volume growth in value-added oils is seen at around 18 percent for the quarter.


Margins, operational performance


Copra prices rose 30 percent on a Y-o-Y basis. The company has raised prices of Parachute coconut oil by 5-6 percent to offset rise in copra prices, but the benefit of price hikes taken mid-quarter will be seen completely in October-December quarter.


Cost pressure will not be so intense (reflecting the sharp increase in copra prices) as the company has some low-cost inventory. Overall analysts expect gross margin to decline 100-120 basis points for Q2.


Earnings before interest, tax, depreciation and amortisation (EBITDA) may increase 14.3 percent year-on-year to Rs 173 crore and operating profit margin is likely to increase 60 basis points Y-o-Y to 13.6 percent in the quarter gone by.


Absolute EBITDA growth of the FMCG major will be driven by lower advertising expenses and the demerger of Kaya business.

International business has shown some sign of recovery and is expected to grow at around 12 percent, say analysts.



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First Published on Oct 29, 2013 10:06 am
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