ICICI Direct's research report on Marico
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.
Outlook
We maintain our BUY recommendation and target price of Rs 490/share.
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