Marico gets mixed views from brokerages despite positive Q4 business update

Over the past six months, Marico shares have slipped 5.3 percent.

Brokerages remained mixed on FMCG player Marico, despite hopes of positive revenue growth after three quarters in slump.

The company, in its Q4 update, stated that its international business has reverted to clocking double-digit constant currency growth. Marico also expects domestic revenue growth to outpace volume growth in the coming quarters, along with a strong gross margin expansion on a year-on-year basis.

"In Q4, the domestic business posted a slight uptick in volume growth on a sequential basis owing to steadying trends in majority of the portfolios," it said.

International brokerage CLSA retained its 'sell' call on the stock, with a target price of Rs 451 per share, implying a downside of 11.5 percent. The brokerage said that Marico may announce a revenue growth of 2.8 percent, which is a slight decline to what consensus expects.

Since the management expects the revenue growth momentum to keep improving going ahead, Morgan Stanley decided to maintain its 'equal-weight' call, with a target price of Rs 533 apiece. Marico met its earlier stated target of positive revenue growth for the upcoming quarter and margins for FY24.

On the other hand, Macquarie retained its positive 'outperform' call on Marico, with a target price of Rs 600. From the closing price of April 5, this indicates a 17.8 percent upside. Per the brokerage, Marico's commentary is broadly in-line, as India's volume growth has seen a slight uptick as as well.

"Amid the backdrop of improving macro-indicators, we expect a gradual uptick in the growth of our core categories through the ongoing initiatives to enhance the profitability of our General Trade (GT) channel partners and focused investments towards a transformative expansion in our direct reach footprint across urban and rural outlets over the next couple of years," Marico said.

Over the past six months, Marico shares have slipped 5.3 percent. In comparison, India's frontline index, Nifty 50 gained around 15 percent during the same time.