Marico Industries may not meet ‘somewhat excessive’ profit expectations by the analysts community for

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the next couple of quarters, the company said in an announcement to the Bombay Stock Exchange (BSE).

Milind Sarwate, chief - finance, HR and strategy at Marico said, “We are confident that we’d manage in the short term. Our long-term confidence is intact. Depending on the several factors impacting us, we might have to change our strategies after the next two quarters.”

The company is facing the heat of the rise in copra prices. Copra constitutes around 40 per cent of total material cost for the company. “Any structural change is just a possibility at this moment, but if it does materialise, we may not see a major improvement in our margins until we reset the rules of the game. We expect that it will take us a couple of quarters to gauge the trend in the right manner and modify our strategies accordingly,” said Marico.

Kaustubh Pawaskar, research analyst at Sharekhan said, “The increase in raw material prices and the issues in Egypt are taking a toll on its margin. We expect margin pressure to sustain in the second quarter.”

“We will be able to gauge the next two quarters after the performance in the second quarter. Our rating will remain ‘hold’ on the stock,” added Pawaskar.

The business environment in the Middle East and North Africa (MENA) region continues to be uncertain, as per company update. There has been a virtual standstill in business in some countries like Libya, Syria and Yemen. The share of Marico’s business in MENA is about five per cent.

Factors like inflation, especially in food items and higher consumer finance interest rates may have already began affecting overall consumer demand in India, Marico said. Against this backdrop, the company may not take any further increase in retail prices as it may impact the volume growth numbers.