Marico (Q4 FY14)

Operating margins expanded by 220bps to 14.4% (on a low base) led by sharp decline in overhead, staff and advertising cost.

May 06, 2014 08:05 IST India Infoline News Service

CMP Rs217, Target Rs244, Upside 12.4% 

  • Marico recorded 7.3% yoy increase in consolidated revenues at Rs10.7bn during Q4 FY14 – marginally above our expectations of Rs10.5bn

  • Parachute’s rigid portfolio (packs in blue bottles) witnessed ~10% yoy volume growth – a smart recovery from mere 2% reported in Q3 FY14

  • International business recorded healthy 21% yoy growth in revenues at Rs2.6bn with constant currency growth 8% and volume growth 4%

  • Despite steep rise in raw material cost OPM expanded by 220bps to 14.4% aided by sharp decline in overhead, staff and advertising cost

  • Net profit registered 71.8% yoy growth at Rs916mn on a low base - marginally above our expectations of Rs891mn. Adjusted net profit grew by 6% yoy to Rs888mn

  • We maintain Buy rating on the stock with a revised 9-month target price of Rs244

Result table
(Rs m) Q4 FY14 Q4 FY13 % yoy Q3 FY14 % qoq
Net sales 10,698 9,973 7.3 11,984 (10.7)
Other operating income 22 13 67.5 23 (4.4)
Total Income 10,721 9,986 7.4 12,007 (10.7)
Material cost (5,597) (4,410) 26.9 (6,206) (9.8)
Personnel cost (651) (962) (32.3) (679) (4.1)
Advertising cost (1,219) (1,257) (3.0) (1,341) (9.1)
Other overheads (1,710) (2,143) (20.2) (1,763) (3.0)
Operating profit 1,543 1,215 27.0 2,018 (23.6)
OPM (%) 14.4 12.2 224 bps 16.8 (242) bps
Depreciation (215) (253) (14.9) (207) 4.1
Interest (68) (124) (45.7) (73) (7.6)
Other income 128 102 26.3 180 (28.8)
PBT 1,388 939 47.9 1,918 (27.6)
Tax (473) (406) 16.5 (501) (5.8)
Effective tax rate (%) 34.0 43.2 26.1
Minority interest (28)

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