Marico Q1 Results: 15% Surge in Profit at Rs 436 Crore, 3% Decline in Revenue
Marico Q1 Results
Marico’s Q1 FY 2023-24 Results: 15.6% Rise in Profit, 3.1% Dip in Revenue
Marico, a leading consumer goods company in India, recently released its financial results for the first quarter of the fiscal year 2023-24, ending on June 30, 2023.
The company’s performance during this period exhibited a notable increase in profit on a yearly basis, although there was a slight decline in revenue.
Let’s delve deeper into the Q1 performance, stock movement, key highlights from Marico’s investor presentation, and analyze the factors contributing to its results.
Financial Performance for Q1 FY 2023-24:
During the first quarter of FY 2023-24, Marico’s consolidated profit stood at Rs 436 crore, reflecting a substantial growth of 15.6% compared to the same period in the previous fiscal year.
In Q1 FY 2022-23, the company’s profit had amounted to Rs 377 crore. The significant surge in profit highlights Marico’s ability to capitalize on opportunities and streamline operations, resulting in improved bottom-line performance.
On the other hand, the company’s income for the quarter decreased by 3.1% year-on-year, amounting to Rs 2477 crore.
In the corresponding period of FY 2022-23, Marico’s income had recorded Rs 2558 crore. The decline in revenue can be attributed to various factors, including changing consumer preferences, competitive market dynamics, and disruptions caused by the ongoing global economic conditions.
EBITDA and Margin:
Marico’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased to Rs 574 crore in the June quarter from Rs 528 crore in the same period last year, showcasing a positive growth of 8.7%.
Additionally, the EBITDA margin expanded to 23.2%, an improvement from 20.6% in the previous fiscal year’s June quarter.
This improvement in the EBITDA margin indicates the company’s efficient cost management, operational effectiveness, and ability to optimize its resources for higher profitability.
The rise in EBITDA is a positive sign, indicating that Marico has been successful in controlling its operating expenses and enhancing its overall operational efficiency.
The company’s focus on driving volume growth in its FMCG business also played a significant role in boosting its EBITDA and profitability.
Volume Growth in FMCG Business:
Marico’s investor presentation highlighted significant growth in the volume of the company’s FMCG (Fast-Moving Consumer Goods) business.
The company’s FMCG products encompass a diverse range of consumer essentials, including hair care, skincare, edible oils, and other personal care items.
During the June quarter, Marico’s FMCG business witnessed a robust increase in volume, indicating strong consumer demand and market acceptance of its products.
The growth in volume reflects the effectiveness of the company’s distribution network, marketing strategies, and innovative product offerings.
While there was a slowdown in quarterly pricing growth, the company stated that it would focus on driving growth through volume.
This approach aligns with the evolving consumer preferences and changing market dynamics, where consumers are increasingly seeking value-driven products and affordable offerings.
However, Marico also expressed concerns over the impact of higher prices on rural demand.
The rural market plays a significant role in the company’s overall sales, and any adverse impact on rural demand could potentially affect its revenue growth.
External Factors Influencing Growth:
In its investor presentation, Marico also highlighted external factors that could influence its growth trajectory.
The company acknowledged irregular weather patterns, the early onset of El-Nino, and uneven distribution of rainfall as potential challenges that could hamper demand and economic recovery.
These factors may affect the company’s sales and distribution in specific regions and impact the agriculture-dependent rural economy.
Performance Compared to Estimates:
The company’s profit figures for the June quarter were in line with estimates, while the income figure fell short of expectations.
According to a poll conducted by CNBC TV18 among brokerage firms, the profit estimate was Rs 416 crore, and the income estimate was Rs 2500 crore.
While the profit growth was better than estimated, the decline in revenue may have disappointed some investors and analysts.
Stock Performance on July 28, 2023:
On July 28, 2023, Marico’s stock closed at Rs 574.35 on the National Stock Exchange (NSE), showing a gain of Rs 20.30 or 3.66% on the day.
The stock’s day’s high was Rs. 578.15, and the day’s low was Rs. 553.05. Over the past year, the stock’s price ranged between its 52-week high of Rs 578.15 and its 52-week low of Rs 462.70.
The stock’s trading volume on the mentioned date was 7,372,578 shares, indicating active investor interest.
Stock Performance Over Different Time Frames:
Marico’s stock has showcased strong performance over various time frames, indicating investor confidence and positive market sentiment towards the company.
In the past week, the stock gained 6.63%, outperforming broader market indices during the short term. Over the past month, it surged by 9.82%, reflecting sustained positive momentum.
Over the last three months, the stock delivered a notable return of 15.70%, further reinforcing investor optimism.
Since the beginning of the year, Marico has provided investors with a return of 12.65%, reflecting its resilience amid market uncertainties and the positive impact of its growth initiatives.
Moreover, over the past year, the stock has recorded a growth of 11.63%, indicating long-term investor confidence.
Remarkably, in the span of three years, the stock has seen a remarkable gain of 58.68%.
This multi-year performance showcases Marico’s ability to deliver consistent value to its shareholders and highlights its position as a reliable investment choice in the consumer goods sector.
Conclusion:
Marico’s Q1 FY 2023-24 results demonstrate a significant rise in profit and an enhanced EBITDA margin, reflecting its efficient cost management and operational effectiveness.
The growth in volume for its FMCG business is a positive sign, indicating strong consumer demand and market acceptance of its products.
While the company’s profit figures were in line with estimates, the decline in revenue raised some concerns.
The impact of external factors, including irregular weather patterns and uneven rainfall distribution, poses challenges for Marico’s growth in specific regions and segments.
Marico’s stock performance reflects investor optimism, with notable gains over different time frames. The stock’s consistent positive performance reinforces its position as a favorable investment choice for long-term investors.
As Marico continues to navigate the ever-changing market landscape, its focus on driving volume growth, managing external risks, and capitalizing on opportunities will be crucial to sustaining its growth trajectory.
Investors and stakeholders are advised to closely monitor the company’s strategies and financial performance for informed decision-making.
