Marico Ltd. share price target

Consol. gross margin expanded 520bp YoY to 47.5%. Higher A&P; expenses as % of sales (+190bp YoY to 10.1%; absolute A&P; spends up 31.9% YoY), increase in employee expenses as % of sales (+20bp YoY to 5.9%) and lower other expenses as % of sales (down 10bp YoY) meant that EBITDA margin expanded 320bp YoY to 21.3% (est. 20.5%). Standalone Sales/EBITDA/adj. PAT grew 5.5%/23.8%/26.2%. EBITDA margin expanded 290bp YoY to 19.6%. Volume growth was 9%/ 7%/3% and value growth 8%/6%/11% respectively for Parachute (rigid), Saffola and VAHO...

Marico posted strong PAT growth of ~27% in Q1FY2020 largely driven by expansion of 321 BPS in OPM (led by reduction in copra prices). Revenue growth stood at ~7% driven by 6% volume growth. Parachute rigid packs continued to perform well with 9% volume growth, while value-added hair oil volume growth stood at 7% in Q1FY2020. The management is confident of achieving 6-8% volume growth in the near term and OPM to...

3 July 2019 that this is in line with expectations and as indicated in the 4QFY19 concall. We note that MRCO was targeting double-digit growth over the medium term. that with a decline of (a) over 20% YoY in copra costs, (b) close to 20% YoY in HDPE and (c) double digit in rice bran oil, along with flattish commodity costs for safflower and LLP, MRCO is likely to report strong gross margin and EBITDA margin growth in 1QFY20. Care Hair Fall Control Oil, launched in West Bengal earlier this year, gained some traction. Coconut Crme Oil, available in Bangalore, Maharashtra and Modern Trade & E-commerce across India, has gained reasonable traction. Hair Waxes, also available in an affordable price point pack (INR 30), received very healthy feedback from trade and consumers. Men Hair Creams is seen gaining traction in the e- commerce channel. NPD contribution is expected to double over the next two years.

Marico has evolved into one of the leading Indian FMCG companies from a coconut oil manufacturer over the past few years.

We value the stock at a P/E of 39x on FY21E EPS and maintain Hold rating with a revised target price of Rs 390. Healthy volume growth in domestic & international business Sales grew by 9% YoY in Q4FY19 to Rs1,609cr backed by underlying domestic volume growth of 8% and value growth of 7%. Domestic volume growth was driven by Saffola segment which reported robust volume growth of 18% led by sustained marketing initiatives. Parachute rigid grew by 6% in volume terms with continued market share gain while Value added hair oils (VAHO)...

Marico is amidst a copra deflationary cycle and plans to capitalize by building its futuristic portfolio. The co. is reinvesting its GM expansion into higher A&P spends to support new launches. In the recent past, the co. has launched several products in categories like premium hair oil, food and male grooming. Although the products are niche and may not have a high success rate, we admire the management's aggression which will aid in driving product diversification and long-term growth. Maricos 4Q performance was mixed albeit healthier vs. Dabur & GCPL. Revenues missed our estimates despite in-line volume growth while GM expansion beat estimates (tactical purchase of RM). We cut EPS estimates by 4-5% over FY20-21E to factor moderation in demand and GM expansion. However, we remain constructive on Marico and believe its performance will be superior to its peers in FY20. We value the co. at 35x on FY21 EPS arriving at a TP of Rs 386. Maintain BUY.

Easing of copra prices aided margin improvement. Maintain Accumulate. Marico's Q4FY19 revenue was below our estimate, but APAT was in line. Volume growth was 8%, on a base of 1% growth. Although volume growth in Saffola was impressive at 18%, VAHO's was a mere 1% in the quarter. The Saffola portfolio gained traction in modern trade and e-commerce. Going ahead, the company plans to introduce new improved offerings in...

Led by marketing initiatives and certain pricing changes, the Saffola witnessed a significant 19% volume growth against 2% in Q3FY19. The management expects this recovery to continue in coming quarters and has guided for mid-teens volume growth, going forward. We expect the company to witness superior volume trajectory on the back of improved Saffola numbers. Modern trade and e-commerce channels also helped growth in Saffola portfolio. As of today, e-commerce contribution to turnover has already crossed 3% compared to <1% on a YoY basis. We...

Marico came out with good set of numbers in Q4FY19. Consolidated results were mostly in line with our estimate. Consolidated revenue for the quarter grew 8.7% YoY to Rs 16090 mn against our estimate of Rs 16490 mn. EBITDA for Q4FY19 came at Rs 2830 mn (estimate Rs 2940 mn) a growth of 12.3% YoY. EBITDA margin increased 56 bps YoY to 17.6% for the quarter against 17% in Q4FY18. Adjusted PAT (adjusted for one time tax write back of Rs 1880 mn) for the quarter stood at Rs 2130 mn ahead of our estimate of Rs 2010 mn, a growth of 18% YoY. We like Marico over other FMCG...

Volume growth stood at 8%; margin expansion due to lowering copra prices: Marico's consolidated revenue grew by ~9% to Rs. 1,609 crore with domestic volume growth standing at 8% (better than Q3FY19 volume growth of 5%). Rural general trade grew by 12%, as it continued to outpace urban market general trade growth, which stood at 1% in Q3FY2019. The correction...