The Marico Ltd stock rose 4.3% on Tuesday, while the Nifty 50 index declined by nearly 1%. What explains investor optimism despite the company’s 7% year-on-year drop in consolidated revenues for the March quarter?
Marico’s profit margin performance has been encouraging, say analysts. Gross profit margin expanded by 23 basis points over the same period last year to 49.3%. “Despite the price cuts in Parachute and weaker mix, gross margins were marginally up," wrote Emkay Global Financial Services Ltd analysts in a report on 4 May.
Parachute is Marico’s flagship coconut oil brand. Further, Ebitda margin also increased by 58 basis points to 18.9%, primarily helped by the reduction in advertising and sales promotion (A&P) expenses.