India’s Marico misses profit estimates as rural demand drags

CHENNAI (Reuters) – India’s Marico reported quarterly earnings below market expectations on Monday, as the consumer products maker failed to spur demand in the inflation-stung rural centres.

Marico’s net profit rose 17.3% to 3.53 billion rupees ($42.4 million) in the July-September quarter, but missed analysts’ average estimate of 3.57 billion rupees, according to LSEG data.

Demand for branded goods is yet to bounce back in India’s hinterlands due to rising food prices and below-normal rainfall although lower copra and vegetable oil prices have allowed Marico and rival Adani Wilmar to slash prices.

The lower prices helped Marico’s domestic volumes grow in the low-single-digit percentage range, which analysts said was “lackluster” and “muted.”

Revenue from operations fell marginally to 24.76 billion rupees, hurt by a 3.4% fall in sales from its domestic operations.

Shares in Marico, which also operates in Bangladesh, Vietnam, the Middle East and Africa, closed down 1%, cutting their gains to 4.5% this year.

Marico’s results come a week after Hindustan Unilever and ITC said competition from smaller rivals had risen as lower prices of ingredients had created a more level playing field.

Broadly, consumer goods makers expect an improvement in sales volumes in the second half of the year ending March 2024 on expectations for a pick-up in farm incomes and signs of cooling inflation. ($1 = 83.2225 Indian rupees)

(Reporting by Praveen Paramasivam in Chennai; Editing by Savio D’Souza)