Marico Ltd. share price target

Recently, the stock price of Marico Ltd. (Marico) corrected by ~14% from 52-week high of Rs.349 as the company reported lower volume growth due to GST implementation and lower margin on account of higher copra prices in the recent quarters. With the strong brand equity in its two flagship brands, Parachute (associated with nourishment & purity) and Saffola (associated with health & wellness), Marico has successfully extended its brands into higher growth and underpenetrated categories, like, value added hair oil...

We value Marico based on P/E of 35x Sep-19, and derived a TP of Rs 343. We are optimistic about Marico's long-term story, with near term challenges and rich valuation, we maintain NEUTRAL. Maricos consolidated net revenue grew by 6.5% YoY at Rs 15.4bn, lower than our expectation of 9.7% growth (weaker international business). EBITDA and PAT was up 2% each, in-line with our expectation. Restocking and recovery in rural areas (up by 14%) resulted in healthy 11.5% growth in domestic revenues (78% of total). Domestic volume growth of 8% (our expectation 9%) was largely in-line.

ICICI Securities Ltd | Retail Equity Research Consolidated sales for the quarter grew 6.7% YoY to | 1536.3 crore, largely in line with our estimate of | 1504.0 crore. The India business reported growth of 7.7% YoY against our estimate of 5.3% YoY growth led by 8% YoY volume growth. Domestically, volume was driven by a) selective price cuts in the Saffola (~3.5%) and VAHO (~5%) categories and b) re-stocking in general trade. International business continued to show sluggish growth (2.7% YoY growth...

Marico's 2QFY18 sales grew 6.7% YoY to INR15.4b (est. of INR16.4b). Domestic volume growth stood at 8% YoY (in-line), while overall volume growth was 5% YoY. Domestic revenues grew 12% YoY, while reported international revenue fell 8% YoY (1% growth on a constant currency basis). Consol. gross margin contracted 570bp YoY to 47.0%, mainly as copra costs were up 84% YoY. EBITDA margin shrunk 70bp YoY (est. of -110bp) to 16.9%, and EBITDA increased 2.4% YoY to INR2.59b (est. of INR2.66b). Adj. PAT increased 2.5% YoY to INR1.85b (est. of INR1.95b)....

We expect 21% EPS CAGR over FY17-20. We value Marico based on P/E of 35x Jun-19, and derived a TP of Rs 340. With a limited upside, we maintain our NEUTAL rating on the stock. Maricos consolidated net revenue contracted by 4% YoY at Rs 16.8bn, higher than our expectation of 1% decline. EBITDA/PAT dipped by 13%/12% YoY. Domestic revenues (77% of total) were impacted by channel destocking. Revenue and volumes witnessed 4% and 9% contraction. In the Hair Oil portfolio, both Parachute and VAHO have witnessed immense pressure, and clocked value/volume growth of +3/-7% and -7/-8%. Considering the growth in the healthy hair oil category at the retail level, we expect Maricos hair portfolio would bounce back in the coming quarters.

The India business declined 4.3% YoY on account of 9% YoY volume decline on the backdrop of de-stocking by trade (mainly wholesale and CSD) in June ahead of GST implementation. All categories suffered a volume decline. Parachute and Saffola declined 9% YoY each while value added hair oil (VAHO) declined 8% YoY International business was broadly flat YoY mainly on account of a decline in the MENA region by 14% in constant currency. Bangladesh, South East Asia, South Africa and newly entered...

Revenue fell by 6.99% to Rs. 1315.17 Cr in Q4FY17 when compared to the previous quarter.

Marico posted strong set of numbers during the quarter with the 10% volume growth in domestic business. However, International business was a drag on topline growth with MENA region posting 46% YoY decline due to currency devaluation. Consolidated sales for the quarter grew by 2.2% YoY to | 1315.2 crore (I-direct estimate: |1407.2 crore). India business grew by 6% YoY led by 10% YoY volume growth. Volume growth for Parachute portfolio, Value added hair oils (VAHO) and Saffola was at 15%, 10%...

Maricos consolidated net revenue grew 2.4% YoY to Rs 13.2bn, lower than forecasts. However, EBITDA/PAT increased by a robust 21%/25% YoY, exceeding our expectations. Domestic revenue (77% of total) recovered after posting a 9% decline in 3QFY17, and clocked 6% growth in 4QFY17. Volume growth of 10% exceeds our expectation of 8%.

Q3FY17 consolidated net sales, EBITDA, and adj. PAT declined7%, 6%, and 7%. India volume declined 4% YoYwith healthy 6% volume growth in Saffola, mild 1% decline in Parachute and sharp 12% decline in VAHO (value added hair oil). Internationalsales stood flat YoY (2% growth in constant currency). Ind..