JM Financial recommended hold rating on Marico with a target price of Rs 330 in its research report dated October 30, 2017.
JM Financial's research report on Marico
We are enthused by the levers that Marico seems to have at its disposal to manage input-costs, such that despite a 17% sequential rise in copra prices, the same did not cause too high an incremental GPM damage. 2.4% operating profit growth was c.5% better vs our forecasts. The much-awaited price-hikes have been done in Oct (10% on Parachute portfolio) which should help ease some margin pressure going forward. International revenue remained unpredictable – Bangladesh’s double-digit CC growth was offset by weakness that emerged in Vietnam (-8% CC) and continued weakness in Middle East.
Stock performance should improve going forward, especially since the worst on margin pressure front seems behind now post the Oct price-hike. Valuation of 44x NTM EPS is a bit too rich for comfort, though.
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