Marico Stocks Outperform Other FMCG Companies With Lower Raw Material Costs

Shares of the Indian based consumer goods company, Marico, hit a new high as compared to stocks of other FMCG companies. It has been the best-performing stock in the Bombay Stock Exchange FMCG index, gaining 12% in the past three months. The main reason for this is the lower prices of major raw materials including copra, mentha oil and liquid paraffin. Prices of copra, the main ingredient for its hair oil brand Parachute, declines 33% over the past 12 months. A decrease in raw material prices brought down the operating costs. Earlier, raw material costs contributed 55% to the net sales, which fell to 48% in the December 2015 quarter. This enhanced Marico’s operating margin by 250 basis points to 18.9% in the quarter compared to the previous year. This trend is expected to continue as Marico will enjoy the benefits of lower input costs in the future too.

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