Marico Ltd. share price target

We met with the management of Marico (MRCO) to discuss industry trends, the company’s growth across verticals, and its long-term strategies. MRCO is focused on achieving steady double-digit growth, driven by the gradually improving trajectory in its core categories, rapid scaling of new-age businesses, and stable growth in international markets.

Marico posted mixed performance in Q3FY25, led by a sequential improvement in volume growth in the domestic business and revenue beating estimates, while OPM fell y-o-y and missed estimates.

Compared to consensus, 3QFY25 sales were 2% lower (1% below our estimate) while EBITDA was 1%

Marico (MRCO) reported consol. revenue growth of 15% YoY (in line) in 3QFY25. Domestic revenue growth was 17% YoY, with 6% volume growth. International growth was 10% YoY (16% cc growth).

Versus consensus, sales miss 1%, EBITDA miss 2% on 15bps lower-than-expected margins. Parachute volumes +4% vs retail offtake +8%

Marico’s Q2FY2025 performance was largely in line with expectations, with consolidated revenues growing by 8% y-o-y (India biz volumes grew 5%) and OPM declining marginally by 48 bps y-o-y to 19.6%, adjusted PAT grew by ~9% y-o-y.

MB's 1QFY25 DPS is paid out, bringing trailing 12M payout ratio to 76%. Two cash repatriations were executed within a 30-day period

Marico Bangladesh's 1QFY25 DPS of BDT100 was recorded on 25 Aug'24. This equates to ~30% of MB's cash/share on balance sheet

We re-iterate a Buy on Marico with a revised PT of Rs. 821. Stock trades at 52x, 45x and 39x its FY25E, FY26E and FY27E earnings, respectively with near to medium-term growth prospects intact.

Similar to Marico, Indian power companies along with global MNCs are facing increased challenges in cash transfers from Bangladesh

Marico Bangladesh (MB), operating in Household and Personal Care, accounts for 11% of MRCO's consolidated sales

Compared to consensus, sales were in line and EBITDA 1% higher. Volumes were +4%, an acceleration vs +2% in the Mar'24 quarter

Marico continues to be on track to execute its stated objectives of increasing direct distribution by 50% by FY27 (Phase 1 initiated in 6 states) and accelerate growth in diversified portfolio.

We note that Marico’s thrust on enhancing its fundamentals is well captured by
the market. Renewed focus on distribution expansion, portfolio enrichment, and
enhancing margin is encouraging. However, valuations at FY26E P/E of 43x
capture the positives.

Stable performance in domestic markets with consistent improvement in gross margins

Marico’s soft performance in Q4FY2024 was largely in line with expectation with revenues growing by 2% (volume growth of 3%) while EBIDTA margins improved by 186 bps y-o-y to 19.4% resulting in 13% y-o-y growth in PAT.

NAM: Strong growth but upside capped cut to HOLD. APOLP: Disappointing result on all fronts. ITC: Cigarette and paperboard businesses disappoint. LT: Order inflow guidance raised; maintain BUY. NTPC: Normal quarter, aggressive expansion; maintain BUY. MRCO: Domestic business still lacklustre. UTIAM: Core earnings miss estimates. ASTRA: Mixed quarter, guidance broadly intact