Marico's high volume growth, margins may not sustain

Rising input costs may induce calibrated price hikes ahead. This may have some bearing on volumes

Sheetal Agarwal 

Double-digit volume growth in its flagship coconut oil (Parachute Rigid) segment as well as in value-added hair oils (VAHO) helped Marico's domestic business volumes grow by a strong 10 per cent in the March 2017 quarter (Q4). Not only was this number higher than street expectations of 6-7 per cent volume growth, it also bounced back from a decline of four per cent seen in Q3 thanks to demonetisation. A key factor driving volumes was the delay in implementing price hikes post rise in costs of its key input, Copra. This fuelled market share gains for Marico in the hair oils category. ...

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Marico's high volume growth, margins may not sustain

Rising input costs may induce calibrated price hikes ahead. This may have some bearing on volumes

Double-digit volume growth in its flagship coconut oil (Parachute Rigid) segment as well as in value-added hair oils (VAHO) helped Marico's domestic business volumes grow by a strong 10 per cent in the March 2017 quarter (Q4). Not only was this number higher than street expectations of 6-7 per cent volume growth, it also bounced back from a decline of 4 per cent seen in Q3 thanks to demonetisation. A key factor driving volumes was the delay in implementing price hikes post rise in costs of its key input- Copra. This fuelled market share gains for Marico in the hair oils category. Its edible oil business - housed under the Saffola brand, too, continued to post healthy volume growth of 6 per cent despite a high volume growth of 10 per cent in the base quarter ending March 2016.The strong show in India business was offset partly by weak international revenues, which fell 8 per cent on the back of macro-economic headwinds in Middle East and North Africa or MENA region. As a result, ... Double-digit volume growth in its flagship coconut oil (Parachute Rigid) segment as well as in value-added hair oils (VAHO) helped Marico's domestic business volumes grow by a strong 10 per cent in the March 2017 quarter (Q4). Not only was this number higher than street expectations of 6-7 per cent volume growth, it also bounced back from a decline of four per cent seen in Q3 thanks to demonetisation. A key factor driving volumes was the delay in implementing price hikes post rise in costs of its key input, Copra. This fuelled market share gains for Marico in the hair oils category. ... image
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