FMCG firm Marico Ltd on January 5 gained over 2 percent in early deals after the company said it is expecting modest growth in operating profit as key input prices stabilised in October-December quarter.
At 10 am, the stock was quoting at Rs 516 on the NSE, higher by 2.12 percent. The scrip has gained a little over 5 percent in the last six months.
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However, the overall commentary for the quarter remained muted. In its Q3 business update, the company stated that its consolidated revenue grew in low single-digit on a year-on-year (YoY) basis due to a muted recovery in rural demand amid elevated inflation.
Marico noted that during the quarter, the FMCG sector witnessed some improvement in demand, which was more visible in specific categories buoyed by the festive fervour and winter season.
"However, recovery in rural demand was not as discernible as retail inflation stayed at elevated levels," it said in a regulatory filing.
The company, which is expected to declare its third-quarter financial results this month, added that in view of lower revenue growth, it expects modest growth in operating profit.
"As we witnessed some semblance of stability in key input prices and consumer pricing across key franchises, gross and operating margins are expected to improve both on a sequential and year-on-year basis," Marico said.
The company's India business marked a slight improvement over the preceding quarter to post a mid-single-digit volume growth.
In terms of segment-wise performance, Parachute Coconut Oil posted low single-digit volume growth after a visible recovery in December as consumer pricing stabilised with copra prices firming up in the off-season.
Additionally, the company's Saffola franchise grew in double digits in value terms with Saffola Oils posting low teen volume growth and Foods continuing its strong run towards the stated revenue aspiration. Premium personal care, on the other hand, witnessed double-digit growth in line with sectoral trends.
Also Read: Marico Q2 Result | Consolidated profit dips 3% YoY to Rs 301 crore
As regards international business, the company said that the business "continued its healthy growth momentum with high single-digit constant currency growth, even while contending with implications of currency depreciation and high inflation in key markets," adding that Bangladesh held steady despite challenging macros, while the other markets performed well.
Foreign brokerage firm CLSA has an ‘Underperform’ call on the stock with target at Rs 550 apiece. “Its performance is likely to remain muted with low-single-digit growth. International business is likely to perform better,” the firm noted.
Nomura has a ‘Neutral’ call on the counter with a target price of Rs 590. Q3 business update tad weaker than expected in terms of sales/demand, it noted.
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