Marico profits not adding up, shares take a tumble

Shares of Marico fell over 6 percent in early trades on Thursday after the consumer products maker warned of below-expected profits in coming quarters.

Milind Sarwate, group chief financial officer, had told Reuters on Wednesday its post-tax profit in upcoming quarters may fall short of market expectations due to rising costs and continued uncertainty in the global markets. At 9.27 a.m, the stock was down 6.27 percent at 149.40 rupees in a steady Mumbai market.

The company is mindful of the need to create a long-term consumer franchise, rather than raise prices to target better short term quarterly results. Its assessment is that factors like inflation, especially in food items and higher consumer finance interest rates may have already begun affecting overall consumer demand in India. That explains why it is not so keen on going for a further increase in retail prices as it may impact the volume growth numbers.

Marico sees continuing headwinds from the volatile Middle East and North Africa (MENA) region, which accounts for about 5% of its business. But the company continues to be bullish on the long-term potential of its businesses.

Reuters