Stock Check: Marico share price tanks nearly 20% from 52-week high; what’s the way ahead?

Stock Check: Marico share price slumped nearly 20% from its 52-week high level of ₹719.85, which was recorded on 3 October 2024. The Mumbai-based company is a top Indian FMCG company that exports to more than 25 countries. The company's range of products consists of brands like Parachute, Saffola, and Livon. Marico share price has corrected nearly 12% in the last three months.

Market analysts think that the company did well in the quarter (Q2FY25), mostly due to strong volume growth in the domestic rural market, which is anticipated to continue to help in the next quarter.

The domestic FMCG company saw a rise of 20.27% in consolidated net profit to ₹433 crore during the September quarter. Marico stated in a regulatory filing that it had recorded a net profit of ₹360 crore in the same period last year.

During the quarter being evaluated, the company's total revenue increased by 7.6% to reach ₹2,664 crore from its operations. A year ago, it stood at ₹2,476 crore.

Stock Downgrade

Nevertheless, in its latest report, Geojit Financial Services has downgraded the stock's rating to 'Accumulate' and set a new target price of ₹678. The brokerage's report mentioned that Marico anticipates a double-digit growth in its domestic and international business in H2FY25, signaling improved future performance. Nevertheless, the cost price is anticipated to increase because of a rise in input cost, potentially impacting its margin. Moreover, there is an anticipation that the uncertainty in Bangladesh's international business will restrict its overall performance in the near future.

“Cautiously we downgrade our rating on the stock to ACCUMULATE with a revised target price of ₹678 based on 48x FY26E Adj. EPS,” the brokerage said.

Urban consumption revival to take six months

According to a recent Reuters report, the company's managing director said that urban consumption is expected to take at least six months to recover, indicating further challenges for the industry due to high food inflation reaching a 15-month peak.

In October, food items in India experienced their highest annual inflation at 10,87%, while retail inflation also reached a 14-month peak due to rising vegetable prices, leading to doubts about a potential interest rate reduction by the central bank.

Urban consumption will need a few quarters to recover. Marico CEO and MD Saugata Gupta stated in an interview with Reuters in Mumbai that urban consumption is likely to bounce back once the food inflation issue is sorted to a greater extent.

On Tuesday, Marico share price closed 0.75% lower at ₹590.70 apiece on NSE.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.