Marico Shares Soar on Strong Q1 Performance
Marico Ltd shares achieved a new record high of Rs 874 on the Bombay Stock Exchange (BSE), marking a 2% increase in the current trading session. This surge follows the company's positive Q1 business updates, which projected strong operational and financial growth. The fast-moving consumer goods (FMCG) major's market capitalization reached an impressive Rs 1.09 lakh crore, with the stock also hitting a high of Rs 854.35 in the preceding session.
Driving Factors: Q1 Business Updates and Market Optimism
The rally is primarily fueled by Marico's Q1 business updates, where the company anticipates strong operating profit growth, underpinned by robust business performance and a softening of copra prices. Marico expressed optimism regarding consumption trends, although it continues to monitor evolving inflationary conditions and the potential impact of El Niño on monsoon patterns. Consolidated revenue is expected to grow in the low-twenties percentage range for the June quarter, driven by broad-based strength across its core, digital, and international businesses.
Domestic and International Business Momentum
Marico's India business reported double-digit underlying volume growth, marking its strongest performance in several quarters. Its flagship Parachute brand also achieved double-digit volume growth, while the value-added hair oils portfolio saw revenue growth in the twenties percentage range, benefiting from premium offerings and expanded distribution. Internationally, the business delivered mid-teens constant currency growth, with standout performances in Vietnam and the Middle East & North Africa (MENA) region. However, demand in Bangladesh experienced a transient moderation due to elevated inflation and pricing anniversarisation effects.
Brokerage Outlook: JM Financial Raises Price Target
In response to the positive outlook, brokerage firm JM Financial has reiterated its 'BUY' rating for Marico, raising its price target to Rs 985 from the previous Rs 930. The brokerage projects consolidated sales and EBITDA growth of 22% and 19% year-on-year, respectively, for the quarter, highlighting Marico's strong execution in navigating inflationary cycles and its successful portfolio transformation efforts.
Historical Performance and Future Watch
Over the past two years, Marico stock has delivered significant returns, gaining 39%, and an even more substantial 58% over three years. Despite this impressive trajectory, the company remains vigilant, closely observing economic indicators like inflation and climatic factors such as El Niño, which could influence future consumption trends and input costs.