Marico Ltd. share price target

6 May 2019 Domestic revenue increased ~6% YoY, led by volume growth of 8% YoY. (+160bp YoY to 9.5% of sales) and employee expenses (+30bp YoY to 7.3%) restricted EBITDA margin expansion to 50bp YoY (17.6% v/s our est. PAT grew 16%, 13% and 14%, respectively. EBITDA margin contracted 50bp YoY to 17.5%. (1) MRCO is targeting 8-10% volume growth in India and double-digit CC growth in international biz. (2) New products as a proportion of sales are likely to double over the next few years. (3) Domestic EBITDA margins are targeted to be over 20% and international margins over 18%. There is no material change to our FY20/21 EPS forecasts, as the outlook remains strong with a likely EPS CAGR of ~21% over the next two years.

As mentioned in our 4QFY19 update for MRCO (2nd April'19), input cost pressure is easing, especially for copra, which accounts for 40-50% of the company's RM cost. Based on the latest data, copra Calicut price was down7.7% MoM in Mar'19. Costs of other key commodities -except LLP (+4.5%MoM) -also remain benign (Cochin coconut oil price down 6.6% MoM and HDPE price down 0.6% MoM)

The demand environment remained stable in 4QFY19 with good offtake growth. Rural traction remained intact, exceeding urban growth in the traditional channel. Newer channels (modern trade and e-commerce) are growing robustly. Even CSD has now stabilized, but some slowdown was observed in the wholesale channel, specifically in the month of Mar'18, the reason for which was not mentioned.

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

Marico, being one of India's leading consumer Products Group, in the global beauty and wellness space touches the lives of 1 out of every 3 Indians. Parachute is the leading brand in the Indian cosmetics & toiletries industry and has continued to show volume growth, though Safola growth was disappointing. Marico wants to reduce dependence on Parachute and Saffola by driving new things in the premium segment, like male grooming, serums, hair nourishment and foods are expected to have a significantly higher share in the next five years. Nevertheless,...

Q4FY2019 preview Revenue and PAT to grow by ~14% and ~20%, respectively: In-line with Marico's stable demand outlook, we believe the company is well poised to post double-digit revenue and earnings growth in Q4FY2019. We expect Marico's revenue to grow by 13.7% with sales volume of Parachute rigid packs growing by 6% and Saffola edible oil to grow by 3-4%...

global beauty and wellness space. Marico has extensive portfolio spanning hair care, skin care, edible oils, health foods, male grooming, and fabric care. Marico enjoys leadership position in 90% of its portfolio. As of FY18, International business accounted 22% of revenue. Domestic sales accounts for 78% of sales with Parachute rigid packs contributing 36% of sales, VAHO 26%...

We value Marico based on P/E of 35x Dec-20 with TP of Rs 394. Maintain BUY. Marico delivered a mixed bag with beat in revenue growth and miss on gross margins. Net revenues grew by 15% (exp of 13%) with volume growth of 6% (exp. 6%). The co. benefited from softening of copra prices (-23% YoY, -12% QoQ) but wasnt able to expand GM owing to volatile prices of other commodities. Maricos GM pressure was the least in 3Q vs. HUL, Dabur and Emami. EBITDA/APAT grew by 16/12% (exp 23/20%)

ICICI Securities Ltd | Retail Equity Research India business volumes witnessed muted growth of 5% YoY largely due to weakness in Saffola, non-core coconut oil and low end VAHO portfolio. Value growth of 12.8% for Q3FY19 was driven by price hike taken in Parachute portfolio to counter surge in copra prices over the last year. Parachute, VAHO and Saffola witnessed YoY volume growth of 9%, 7% and 2%, respectively While copra prices have corrected more than 23% YoY, inflation in...

Domestic revenue increased ~13% YoY, with 5% volume growth. EBITDA grew 15.8% YoY to INR3.5b (in-line). Adj. PAT increased 12.7% YoY to INR2.5b (in-line). However, EBITDA margin expenses (-20bp YoY to 8.8% of sales) and other expenditure (-50bp YoY to 12.2%), partly offset by higher staff costs (+20bp YoY to 6.5%).