Marico share price falls 5% post Q3 updates; what should investors do? Here's what experts say

share price saw a dip of nearly 5 per cent during early trading on the on Monday, January 8. This downward trend came in response to the company's recent business updates for the third quarter of the fiscal year 2023 24 (Q3FY24). Marico share price opened at 534.75 against the previous close of 545.80 and dropped 4.6 per cent to the level of 520.80.

Around 9:35 am, the stock was 4.02 per cent down at 523.85. Post market hours on Friday, January 5, Marico said its domestic volumes grew in low single digits in Q3 on a year on year basis with a slight sequential improvement in its core portfolio. The International business delivered mid single digit constant currency growth amidst transient macro headwinds in the Bangladesh market, while the rest of the geographies held strong, the company said in an exchange filing.

Marico's consolidated revenue declined in the low single digits during the December quarter. "With a degree of pricing corrections in key domestic portfolios yet to anniversarise and significant currency depreciation in select overseas geographies, consolidated revenue declined in low single digits on a year on year basis," Marico said.

Also Read: What should investors do? Over the past year, Marico's share price has displayed subdued performance, reflecting a modest 2 per cent increase. This stands in stark contrast to the equity benchmark Sensex, which surged by 18 per cent during the same period. Examining the last six months, Marico's stock recorded a decline while the Sensex exhibited a 10 per cent ascent.

After Marico's Q3 business updates, brokerage firm maintained a 'reduce' call on Marico's stock with a September 2024 target price of 570, based on 42 times its P/E (price to earnings ratio), in line with its last five year average forward P/E. "We have a 'reduce' call on Marico due to its inability to drive structural growth in the domestic business; however, better margin prospects have been aiding double digit earnings growth," Emkay observed.

Emkay expects Marico's consolidated revenue is likely to see a 1 per cent dip with a 1 per cent drop in India business (nearly 1.5 per cent volume growth) and flat international sales. In the domestic business, supply chain issues continue to mar performance, while in the international business, weak macros are hurting performance.

"Sustained supply chain hiccups in the domestic business are bothering, given lower rural and general trade dependence. Consolidated EBITDA margin delivery is likely to be strong (more than 225bps to 20.7 per cent), which will aid double digit EBITDA (more than 11 per cent YoY) and earnings (more than 10 per cent) growth YoY," Emkay added.

On the other hand, has a 'hold' call on the stock with a target price of 602. "Based on Marico’s Q3FY24 update, we expect consolidated revenue to dip 2 per cent YoY due to weakness in volume and pricing; however, EBITDA shall grow 11 per cent (versus initial expectations of 5 per cent revenue growth and 11 per cent EBITDA growth)," Nuvama said.

"We reckon its domestic business would log volume growth of 1.5 per cent YoY. The international business delivered mid single digit growth, and is likely to grow nearly 5 per cent YoY in CC terms," said Nuvama. (More to come) Read all market related news Livemint tops charts as the fastest growing news website in the world to know more.

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