Marico Ltd. share price target

Marico holds a strong foothold in the rural and semi-urban regions. With recovery in economic activities and growing demand for its products, Marico's performance should continue to improve further. We revise Target to Rs.483 based on 42x FY23E adj. EPS and recommend HOLD rating due to recent surge in stock price. Robust growth in volume supports topline Q4FY21 revenue surged 34.5% YoY (-5.2% QoQ) to Rs. 2,012cr, as the company benefited from strong volume growth of 25% in domestic market and constant...

Marico (MRCO) 4QFY21 result was above our estimates. Strong recovery witnessed across all categories (essential and discretionary). Food portfolio grew fastest (+134%YoY) and reached Rs 3bn mark. Parachute Coconut Oil, VAHO and Saffola continued strong revenue growth trend driven by penetration and market share gains. Revenue from rural India grew faster than urban India. Input cost pressure continued to impact gross margin (GM declined for 3rd consecutive quarter). MRCO has taken c. 15% and 4% price hike in Saffola Edible oil and Coconut oil during 4QFY21 to address input cost inflation. Management expects inflation in raw material cost to subside by 2HFY22....

We believe tailwind of healthier food consumption is expected to grow the foods & Saffola business in the next two to three years. Moreover, hair oils categories are also expected to witness strong growth with a mix of volumes and price hikes. It is also clear that Marico is looking to gain volumes and market share by not tinkering with prices too frequently. We maintain our...

MRCO reported robust volume growth across categories while gross margins disappointed due to inflation in key RM prices. Although we expect volume growth to trend lower and margin pressure to sustain for next 2/3 quarters, outlook remains positive on account of 1) strategy to push volumes working in high inflationary environment in Parachute and VAHO 2) Improv ed competitive positioning of Saffola with double digit growth from 6 quarters, 3) Opportunity in Foods business with target of Rs 8.5bn revenue by FY24 and 4) Focus to increase rural reach by 25% in next 2 years. We believe near...

Marico retains a strong foothold in the rural and semi-urban regions. With economic activities on the rise and demand for its products returning to near-normal levels, Marico's performance should continue to improve further from hereon. We reiterate our BUY rating on the...

Marico (MRCO) 3QFY21 result was in line with our estimates. Strong recovery is witnessed across all categories (essential and discretionary). Food portfolio grew fastest (+74%YoY) followed by VAHO (+21%YoY) and Saffola (+17%YoY). Parachute reported volume growth of 8% YoY, ahead of the company's medium term aspiration of 5-7%. Traditional trade and e-com continued to outperform while modern trade reached precovid level. Revenue from rural India grew faster than urban India. Input cost remained largely inflationary. MRCO's new launches of Honey and Arogyam Chyawan Amrut are tracking well. Management expects near term demand to remain favorable. We broadly maintain our estimates. Due to rally in stock price our revised rating stands at...

The hair oil categories has been saturated and seen a cyclical growth trends with inflationary price movement. Parachute & VAHO is expected to witness strong volume growth in medium term largely due to low base effect in next few quarters. Moreover, with the promotional offers taken off (effective price increase of 5%), prices are also likely to contribute to the revenue growth. Further, the management indicated impact of tapering down of copra prices would not result in any prices hikes & the company would be able to maintain its current margins. We expect overall revenue growth of 9.5%...

We are increasing FY21/22/23 EPS estimates marginally by 1.8/3.3/7.1% and our rating from Hold to Accumulate. MRCO has given optimistic outlook based on 1) Double digit volume growth in VAHO, 2) steady growth in parachute and Saffola and 3) scalability in oats and Honey with a target of Rs4.5-5bn sales by FY22 4) integration of Beardo acquisition 5) Structural cost savings of Rs 1.5bn in domestic business and 6) Improving growth outlook in Bangladesh and recovery in MENA. Although MRCO is near term input cost pressure in edible oils, LLP and Parachute, it has taken 15-20%...

Marico (MRCO) 2QFY21 result was in line with our estimates. Strong recovery witnessed across all categories (essential and discretionary). Food portfolio grew fastest (+55%YoY) followed by Saffola (+20%YoY) and Coconut Oil (+10%YoY). Positively, VAHO returned back to growth trajectory after 3 consecutive quarter of decline. Traditional trade and e-com continued to outperform. Revenue from rural India grew faster than urban India. Input cost remained largely inflationary and is likely to remain-so up-till 3QFY21. MRCO has launched Immuniveda and Arogyam Chyawan Amrut under Saffola brand to boost immunity based health-food portfolio. We have introduced FY23E in our...

Saturated hair oil category; growth prospects in foods Hair oil category is saturated with limited growth opportunity. In Parachute, ~30% category is unorganised creating limited opportunity to grow through market share gains only. Similarly, VAHO segment has become crowded with too many brands chasing a limited opportunity. We believe growth opportunity for Marico is limited to select brands in VAHO. We believe continued demand for healthier edible oil & food products would result in stronger growth for entire Saffola franchise that is contributing ~25% of...