Industry experts said the current copra price rise is similar to during the period between April 2013 and September 2014 when prices rose by 152%
Marico, the Indian fast moving consumer goods (FMCG) company, could further increase prices of coconut oil based products owing to rising copra prices.
The raw material (copra), which accounts for 43% to 45% of Marico's input costs, increased 56.7% from April 2016 to Rs 8,748 per 100 kg in February 2017. Industry experts said the current copra price rise is similar to during the period between April 2013 and September 2014 when prices rose by 152%.
Saugata Gupta, managing director, Marico Ltd, was not available for a comment due to the silent period before fourth quarter results.
However, according to research analysts Gaurang Kakkad and Premal Kamdar of Haitong International Research Ltd, copra is the key raw material for Marico’s flagship product Parachute Coconut Oil, which contributed 27% of overall sales during April to December period of the last fiscal.
“We expect copra prices to remain high over our forecast period and estimate that Marico increases prices for Parachute 18% in fiscal ending March 2018,” the analysts said in a recent company note.
In fact, during the period between fiscal 2014 and 2015, when there was high inflation in copra prices, the company passed a large part of the cost increase on to consumers through about 33% price hikes. And while Marico gained market share by volume as other cheap regional coconut oil brands were also forced to increase prices, resulting in a narrowing of Parachute’s price premium, the analysts said.
According to Haitong analysts, Marico has already taken a price increase for the 100 mili-litre pouch of Parachute by 14% in February 2017.
“Our channel checks suggest that it hiked prices for Parachute rigid packs across its stock keeping units (SKUs) by a weighted average of 8% in March 2017,” said the analysts.
The analysts expect further price hikes for Parachute to offset continued high inflation in copra prices over their forecast period for Marico. “Over FY17–18, we also expect Parachute to gain volume market share from regional players, as happened in FY14–15,” the analysts said in their company note, while revising up their forecast price increase for Parachute from 6% on year to 18% on-year and copra price rise assumption from 8% on-year to 35% on year for FY18.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Coconut oil")
)
“We expect copra prices to remain high over our forecast period and estimate that Marico increases prices for Parachute 18% in fiscal ending March 2018,” the analysts said in a recent company note.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}