Marico Ltd. share price target

We downgrade our rating from BUY to Accumulate given 1) 28% jump in stock price since our upgrade and 2) rising probability that Copra price decline in the current down cycle will be far lower than previous occasions....

Overall demand environment was good in 3QFY19 with market share gains across key portfolios. The positive sentiment during the quarter was led by festive season and expectations of a stimulus from Government initiatives.

Over the past few years, one of the disappointments investors harbored for Marico was regarding the subdued performance of its new launches. Except for Saffola Masala oats (launched over six years ago) none of the new launches have contributed significantly to the sales growth. However, over the past 18 months, Marico has pulled up its socks and now has a strong product pipeline with a few initial successes. We recently met Marico's management to understand reasons for the new improved pipeline and to gauge the company???s growth targets, going forward

Stock price run-up by 14% in one month; Margins to enhance in the coming quarters on account of receding copra prices: The stock price of Marico has moved up by ~14% in the past one month due to positive commentary by management on demand environment and margin improvement due to declining copra prices. Despite the recent run-up, the stock is...

We value Marico based on P/E of 35x Sep-20 with TP of Rs 380. Maintain BUY. Marico reported a commendable quarter with a beat in revenue and EBITDA growth. Net revenues grew by 20% YoY to Rs 18.4bn (exp. 12%). Volume growth of 6% (exp. 6%) is healthy given steep price hike and disruptions in CSD channel (7% vol. ex-CSD). Gross margin pressure decelerated in-line with our expectations.

ICICI Securities Ltd | Retail Equity Research India business volumes witnessed tepid growth of 6% YoY largely due to a significant decline in canteen stores department (CSD) sales. Volume growth ex-CSD was 7%. Value growth of 19.6% for Q2FY19 was driven by 25% price hike taken in Parachute portfolio to counter input cost inflation. Parachute, VAHO and Saffola witnessed YoY volume growth of 8%, 5% and 5%, respectively While copra prices corrected by more than 11% YoY, consumption...

Q1FY19 revenue growth driven by strong domestic growth of 23% with volume growth of 12% on low comparables. EBITDA margins dipped 180bps YoY on higher input costs. EBITDA grew 9%YoY supported by lower ad expenses (-157bps YoY) and other expenses....

Marico has delivered strong quarterly performance in the backdrop of the extremely challenging input cost environment, with healthy volume growth across key segments including Parachute Rigids (+9% YoY), Value Added Hair Oils (VAHO) (+15% YoY) and Saffola (+15% YoY). YoY comparison is not possible as Q1FY18 was a pre-GST quarter. The company continue to face Gross margin pressure due to steep increase in copra prices, which Marico countered with price hikes in the Coconut Oil portfolio. While near-term earnings shall continue to face pressure on weaker margins (higher copra...

ICICI Securities Ltd | Retail Equity Research Consolidated sales for the quarter grew by 20.5% YoY to | 2026.8 crore (above our estimate of | 1855.2 crore) led by 12.4% increase in India business volumes in addition to ~25% price hike taken by the company in parachute portfolio. India business reported a growth of 22.6% YoY and the international business grew by 12.8% YoY....