Marico Ltd. share price target

Marico's Q4FY15 results came below our estimates (1) revenues were up 14.4% to Rs12.3bn (vs. our est of Rs12.9bn) (2) operating profit jumped 11.0% to Rs1.7bn (vs est of Rs1.9bn) and adjusted net profit grew by 24.0% to Rs1.1 bn (vs est of Rs1.2bn). The domestic consumer business recorded 17% growth mainly led by price hikes in recent quarters.

Buy at Rs 354.2 and add on dips to Rs 317 - Rs 330 for Target of Rs 381 in 1 quarter

Maricos 3QFY15 revenue grew 21% YoY to Rs 14.5bn, aided by the significant price hikes taken across the product portfolio to offset part of the RM inflation (copra up 34% YoY). Volumes disappointed with a mere 2% YoY growth (vs 1QFY15 : 7%).

Karvy initiates coverage of Marico Ltd with a Hold Rating. We expect Marico to deliver an EPS CAGR of 18% during FY14-16E as against 21% during FY12-14 and expect margins to be flat. Catalyst to margins could come from softening of Copra prices which has seen unprecedented price volatility. Volume growth intact and pressure on margins from higher operating costs