Marico Ltd.'s first-quarter business update pointed to stronger-than-expected revenue growth, prompting several brokerages to raise expectations for the consumer goods maker's June-quarter earnings after the company reported broad-based growth across its businesses.
The company said consolidated revenue for the quarter ended June 30 was expected to grow in the "early twenties", driven by its core, digital and international businesses. That compared with Bloomberg consensus estimates for about 15% year-on-year revenue growth.
Marico also said its India business delivered double-digit underlying volume growth, while Parachute Coconut Oil posted double-digit volume growth for the first time in several quarters. The company added that its international business recorded mid-teens constant currency growth, led by Vietnam and the Middle East and North Africa region.
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The update suggested Marico entered FY27 with stronger operating momentum than analysts had anticipated. While the company said higher advertising and promotional spending accelerated during the quarter, it also expected operating profit to grow strongly, supported by business growth and softer copra prices. Management added that it remained optimistic about consumption trends while continuing to monitor inflation and the potential impact of El Nino on the monsoon.
Following the quarterly business update, brokerages said the stronger revenue outlook and sustained volume growth improved confidence in Marico's earnings trajectory for the June quarter.
Here's what brokerages said after Marico's Q1 business update:
Morgan Stanley on Marico
- Maintained Overweight with a target price of Rs 934.
- First-quarter top-line growth was better than expected.
- Favourable business trends had continued.
- Ebitda growth remained the key metric to watch during the earnings season.
- Management remained optimistic on consumption trends.
- Inflation and the impact of El Niño on the monsoon remained key monitorables.
JPMorgan on Marico
- Maintained Overweight with a target price of Rs 900.
- First-quarter revenue, led by volumes, exceeded expectations, while Ebitda growth was likely to be in the high teens.
- The quarterly update strengthened confidence in Marico's ability to deliver high single-digit volume growth.
- Growth was driven by portfolio diversification and continued investment in the core business.
Macquarie on Marico
- Maintained Outperform with a target price of Rs 890.
- The pre-quarter update was better than expected.
- The update pointed to a sequential improvement in volume growth.
- Expected EBITDA to rise about 15% in the first quarter.
Goldman Sachs on Marico
- Maintained Buy with a target price of Rs 900.
- Volume growth accelerated into double digits during the first quarter.
- Parachute volume growth improved sharply to double digits, while Value Added Hair Oils and newer businesses maintained their momentum.
- Ebitda growth was likely to be in the high teens as margins recovered sequentially.
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