Marico Q4 Results Review - Inline Performance; Volume Trend To Improve In FY25: Motilal Oswal

Motilal Oswal Report

Marico Ltd. reported an in-line revenue growth with a slight miss in Ebitda in Q4 FY24. Domestic revenue was flat owing to the impact of price cuts. Volume grew 3%. International growth was 7% YoY (10% cc growth).  Parachute coconut oil posted 2%/2% YoY growth in /volume. The category gained 50 bp in market share, but its performance was subdued throughout the year.

Value added hair oil revenue was down 7% YoY, affected by a high base and persistent weakness in the mass segment. Saffola oil clocked mid-single digit volume growth, but revenue contracted by midteens due to price cuts. Foods sustained strong growth of 24% YoY.

The premium and urban-centric segments stayed ahead of the rural and mass segments. Rural sentiment too saw revival toward the quarter end. The management is optimistic about growth revival in FY25 and expects double-digit revenue growth, driven by healthy volume growth.

Gross margin hit a 28-quarter high of 51.6%, driven by softer input costs. Ebitda margin expanded 190 bp YoY to 19.4%. Ebitda grew 12% (estimate 14%).

We reiterate our Buy rating on the stock with a target price of Rs 625 (45 times FY26E earnings per share).

We believe that Marico is a good play on volume recovery.

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