Marico volatile as government ups support price for copra

The Economic Affairs Committee has approved an increase of the minimum support price for copra produced in 2019 by over Rs. 2,000 per 100 kg to ensure better returns to farmers. The MSP of copra has been increased to Rs. 9,521 per quintal from Rs. 7,511 per quintal. 
  
Government’s move is likely to be a matter of concern for FMCG players like Marico which use copra as their main raw material product. In FY18, out of total raw material used 53 per cent was copra and Kardi seed for Marico. Total raw materials form around 50 per cent of the overall revenue of FY18. Thus, the increase in raw material prices (copra) is likely to overhang on Marico’s margin going forward. 
This can be countered by taking a price hike, but the company has already taken three price hikes in FY18. Thus, it would be interesting to see how the company manages to sustain its margin amid higher input costs. 

In Monday’s trading session, the stock of Marico which opened at Rs. 378.10 apiece same as its previous close but later it dipped to intra-day low of Rs. 372.85. At 14:17 hours, the stock was trading at Rs. 373.6 apiece.