A worker organises bottles of Marico Ltd. coconut hair oil products at a department store. (Photographer: Prashanth Vishwanathan/Bloomberg News) 

Q1 Results: Marico’s Profit Meets Estimates On Strong Rural Growth

Marico Ltd.’s profit for the three months ended June met analyst estimates as growth in rural market outpaced urban for the fourth straight quarter.

Net profit rose 10.2 percent year-on-year to Rs 255.7 crore for the three-month period ending June, the Parachute hair oil maker said in an exchange filing today. Revenue during the quarter rose 20.5 percent year-on-year to Rs 2,026.8 crore. That compares with Rs 1,960 crore estimated.

The domestic business recorded broad-based volume growth, while the international business got off to a slower start, Managing Director and Chief Executive Officer Saugata Gupta said in a press release.

The recent hike in minimum support prices, farm loan waivers and normal monsoons led to a sustained momentum in rural growth. Growth in rural market came in at 28 percent compared with 16 percent in urban during the period, according to the press release.

The operating income, or earnings before interest, tax, depreciation and amortisation, rose 9.2 percent year-on-year to Rs 354.9 crore in the June quarter. Operating margins contracted to 17.5 percent from 19.3 percent during the period.

“The prospects for the rest of the year look encouraging as offtake growth and market shares are trending favourably,” Gupta said. “We will continue to aggressively drive growth in core and new growth engines by investing in brands and capability building.”

The company maintained its volume growth target of 8-10 percent and aimed for a double-digit growth in its international business in constant currency terms for the current fiscal year.

The Marico stock, which fell as much as 7.6 percent after the earnings announcement, ended 4.6 percent lower at Rs 351.40 apiece.