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Motilal Oswal Report
Marico Ltd. reported subdued revenue growth in Q2 FY24, attributed to domestic price cuts and currency headwinds in the overseas business. A sequential improvement was noted in urban areas, while the rural recovery was slow. The management was optimistic about H2 FY24, citing the festive season, controlled food inflation, and upcoming elections.
Gross margin hit a 26-quarter high of 50.5%, driven by softer input costs. Accordingly, the management has raised its margin expansion guidance to 350-400 basis points for FY24.
The domestic business is expected to grow as deflation eases, supported by growth in the food and premium personal care portfolios. Additionally, the international business is anticipated to maintain strong performance.
It expects operating margin to surpass 20% in FY24, driven by effective cost management and strategic brand-building investments, enhancing Marico's earnings growth outlook. We reiterate our 'Buy' rating on the stock.
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