Marico posted strong 25% volume growth with healthy growth in Parachute & VAHO on the back of a low base quarter. Saffola and foods business also continued the growth momentum. Revenue witnessed growth of 34.5% to Rs. 2012 crore led by 25% volume growth in India business and 23% growth in international business (constant currency). Parachute saw growth of 38% led by 29% volume growth. Similarly, Saffola & VAHO witnessed growth of 43% & 22%, respectively. Volume growth in Saffola & VAHO was 17% & 22%, respectively. The foods business grew 134% in Q4. With ~25% increase in copra prices & 39% increase in rice bran oil prices, gross margins contracted 513 bps during the quarter. Employee spends & marketing spends inched up 30 bps & 20 bps, respectively. However, the company was able to save 260 bps through various cost cutting measures. Operating profit increased 13.1% to Rs. 319 crore while operating profit margins contracted 300 bps to 15.9% during the quarter. Led by strong growth in operating profit, net profit witnessed growth of 12.9% to Rs. 227 crore.
Valuation & Outlook
We believe tailwind of healthier food consumption is expected to grow the foods & Saffola business in the next two to three years. Moreover, hair oils categories are also expected to witness strong growth with a mix of volumes and price hikes. It is also clear that Marico is looking to gain volumes and market share by not tinkering with prices too frequently. We maintain our BUY recommendation and target price of Rs. 490/share.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Marico_Q4FY21.pdf
Shares of MARICO LTD. was last trading in BSE at Rs.445.4 as compared to the previous close of Rs. 411.65. The total number of shares traded during the day was 1366665 in over 29658 trades.
The stock hit an intraday high of Rs. 452.8 and intraday low of 416.25. The net turnover during the day was Rs. 606230807.