Marico disclosed its second quarter numbers last night — and the performance was consistent with FMCGs we’ve seen before, where raw material costs are weighing on profits and margins, but growing revenues are partially offsetting damage.
Quick look at numbers:
- Total revenue jumped 31% YoY to ₹2.5K crores
- Profits came in at ₹365 crores, down 6% YoY
- Operating margin declined to 19% from 24%
Management expects raw material volatility to last, which makes for good excuse to raise product prices on end consumers.
Bottomline — despite margin and profitability pressures, stock has been flying. Investors are basically hoping that as inflation cools off, the extra price differential will run right down to the bottom line, boosting profits in the long run.