FMCG player Marico witnessed mixed sentiments from brokerages following its Q4 update, which hinted at positive revenue growth after three consecutive quarters of slump. Despite hopes of a turnaround, analysts’ opinions remained divergent regarding the stock’s future prospects.
Q4 Performance Overview
Marico reported that its international business has returned to double-digit constant currency growth, instilling optimism in the company’s performance outlook. Additionally, it anticipates domestic revenue growth to surpass volume growth in the forthcoming quarters, accompanied by robust gross margin expansion year-on-year.
Domestic Business Trends
The company noted a marginal improvement in volume growth for its domestic business in Q4, attributed to stabilizing trends across various portfolios. This slight uptick in volume growth on a sequential basis hints at a potential recovery in the domestic market.
Brokerage Recommendations
CLSA, an international brokerage, maintained its ‘sell’ rating on Marico’s stock, setting a target price of Rs 451 per share, indicating a downside of 11.5%. The brokerage expressed concerns regarding the company’s expected revenue growth, projecting a slight decline compared to consensus estimates.
In contrast, Morgan Stanley opted to retain its ‘equal-weight’ stance on Marico, with a target price of Rs 533 per share. Despite acknowledging Marico’s achievement of positive revenue growth targets for the upcoming quarter and margins for FY24, the brokerage remains cautiously optimistic.
Market Outlook
The diverging opinions among brokerages underscore the uncertainty surrounding Marico’s future trajectory. While the company’s Q4 performance shows signs of recovery, lingering concerns persist regarding its ability to sustain growth momentum in the long term.
Investor Response
The market response to Marico’s Q4 update was mixed, with some investors adopting a cautious approach in light of the varying brokerage recommendations. The stock witnessed moderate fluctuations in trading volume and price, reflecting the underlying uncertainty in investor sentiment.
Potential Catalysts
Going forward, Marico’s ability to execute its growth strategies effectively and deliver on its revenue projections will be closely monitored by investors and analysts alike. Any deviations from expectations, either positive or negative, could serve as significant catalysts for the stock’s performance.
Marico’s Q4 update paints a nuanced picture of its performance, with indications of a potential turnaround tempered by lingering concerns and mixed brokerage views. As the company navigates through evolving market dynamics, investors remain vigilant, weighing both the positives and negatives to make informed decisions regarding their investment strategies.
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