Why Marico Share Price is Falling

Amid a tumultuous market landscape marked by rate hikes, inflationary pressures, weak global growth projections, and a persistent liquidity crisis in US and European banks, the fast-moving consumer goods (FMCG) sector has emerged as the lone ranger in the positive territory in the current calendar year.

The Nifty FMCG and BSE FMCG index has recorded an uptick of approximately 5.3% and 4.9%, respectively, in 2023, in contrast to the benchmark indices.

Benchmark indices, on the other hand, have suffered a decline of 2% over the same time.

The sector's robust performance can be attributed to its defensive attributes, which make it less vulnerable to market fluctuations.

However, despite the sector's upbeat performance, FMCG company, Marico, was unable to keep up with the broader sectoral trend and underperformed in 2023.

The company's shares are currently trading lower by 6.4% so far in 2023, and recently touched their 52-week low last week on 19 April 2023.

Let's find out why the stock is under pressure.

Muted Q4 update

According to Marico's recent statement regarding Q4, the company expects its consolidated revenue to show low single-digit growth in the March 2023 quarter compared to the same period last year.

Despite remaining stable sequentially, the Saffola franchise recorded a year-on-year decline due to a high absolute volume base.

In terms of the Indian business, Parachute Coconut Oil is anticipated to report robust high single-digit volume growth, supported by consistent consumer pricing and stable copra prices throughout the quarter.

Furthermore, value-added hair oils experienced double-digit value growth.

The company also reported that the food segment has continued to scale up well, and the premium personal care segment has grown in double digits.

Following this muted Q4 update, shares of the company fell.

Long term- outlook

Going forward, Marico's domestic business is expected to perform better than its international operations, driven by robust growth in the company's core categories, such as hair oils and foods.

Marico has been investing heavily in expanding its digital capabilities and e-commerce presence to cater to changing consumer habits and preferences.

The company has also been focusing on sustainability and responsible sourcing practices, which has helped it earn recognition and accolades from various industry bodies.

Also, the company expects a gradual recovery in year-on-year volume trends, with stability in urban and premium categories.

This is in line with the best FMCG stocks, which has also witnessed a gradual recovery with improving year-on-year volume trends in each quarter.

The stability of urban and premium categories is a positive sign, and the easing of broader commodity inflation is expected to contribute to overall consumption trends, particularly in rural markets.

Further, a reduction in the input prices is expected to benefit consumer goods companies by easing margin pressures in the coming quarters.

Additionally, a good monsoon will provide some boost to rural consumption, which might act as a key re-rating point for the FMCG sector.

How Marico shares have performed recently

Marico shares have declined by more than 6% in 2023. Over six months, the company's shares have been trading lower by 8%.

Marico touched its 52-week high of Rs 554.4 on 23 September 2022 while it touched a 52-week low of Rs 462.7 on 20 April 2023.

About Marico

Marico Limited is one of India's leading consumer products companies operating in the beauty and wellness space.

Currently present in 25 countries across emerging markets of Asia and Africa, Marico has nurtured multiple brands in the categories of hair care, skin care, edible oils, health foods, male grooming, and fabric care.

Marico Limited is present in the skin care services segment through Kaya Skin Clinics.

Marico's India business markets household brands such as Parachute, Saffola, Nihar, Livon, Set Wet, and many more.

To know more about Marico, check out the company factsheet and the latest quarterly results.

You can also compare Marico with its peers -

Marico vs Britannia

Marico vs LT Foods

Marico vs Bikaji Foods

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

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