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    Marico shares slump 2% after FMCG firm said Indians purchased lesser Saffola oil

    Marico shares slump 2% after FMCG firm said Indians purchased lesser Saffola oil

    Marico shares slump 2% after FMCG firm said Indians purchased lesser Saffola oil
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    By CNBCTV18.com  IST (Published)

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    Marico share price: Shares of Marico slumped over 2 percent on Wednesday after the consumer products company said that tepid demand and rising retail inflation has impacted its India business. India business volumes declined in mid-single digits, Marico said in its quarterly business update.

    Shares of Marico slumped over 2 percent on Wednesday after the consumer products company said that tepid demand and rising retail inflation impacted its India business. India business volumes declined in mid-single digits, Marico said in its quarterly business update.
    “India business volumes declined in mid-single digits. The performance was particularly dragged by a sharp drop in Saffola oil. Excluding Saffola oil, the India business posted marginal volume growth,” the FMCG major said on July 5.
    At 9:24 am, shares of the fast-moving consumer goods (FMCG) company were trading 0.5 percent lower at Rs 490.2 on the BSE.
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    Marico said the foods business also saw a slow quarter and there was a sharp decline in immunity-led categories like honey, among others. Premium personal care, however, posted robust growth across all segments of the portfolio.
    The international business also showed strong momentum and delivered a high-teen constant currency growth. “All markets exhibited strength and stayed on the path of sustained profitable growth, despite the prevailing global uncertainty and inflationary pressures,” the company said.
    CLSA, which has an ‘underperform’ rating on shares of Marico with a target price of Rs 530, said that lower commodity costs would support profitability but a weak demand outlook is a worry.
    According to Marico, prices of key input, copra, remained soft during the quarter. And while edible and crude oil prices cooled off to some extent towards the end of the quarter, the FMCG company purchased higher-cost inventory this quarter.
    “Marico, Godrej Consumer, some of these companies are definitely facing a higher amount of pressure as far as a business environment is concerned,” said Deven Choksey of KRChoksey. The best thing would be to play out this particular quarter as it comes and probably wait for the commodity prices to remain stable, he said.
    “Already the fall has taken place in food commodity and the positive impact should come somewhere at the end of this quarter, or maybe in the next quarter. So, if that is working out then play out this quarter assuming the technique is going to be having a little negative impact on the company,” he further said.
    The company, meanwhile, said that consolidated revenue in the quarter ended marginally higher on a year-on-year basis and it expects gross margin to expand.
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