Marico signals stronger margins as commodity costs fall

Bengaluru: Marico Ltd forecast stronger margins for the fourth quarter on Monday, as consumer goods companies see some benefit from easing commodity costs and a possible recovery in rural demand.

Marico, which owns the popular Parachute and Saffola oil brands, said gross margin was expected to expand and "drive reasonable growth" as raw material prices fell.

Retail inflation in February eased to 6.44% but has been above the Reserve Bank of India's upper tolerance band of 2%-6% for months, often affecting rural consumers more than others.

A pickup in rural demand - which retail industry trends tracker Bizom says typically makes up about two-thirds of Indian consumer goods companies' sales - is seen as a reflection of improving trends in the economy.

"The sector continued to witness gradual recovery with year-on-year volume trends improving in each quarter," Marico, which expects consolidated revenue in the quarter to grow in low single digits on a year-on-year basis, said in a statement.

The last time Marico posted a double digit growth in revenue was five quarters ago.