Buy Marico; target of Rs 246: Firstcall Research

Firstcall Research is bullish on Marico and has recommended buy rating on the stock with a target of Rs 246 in its February 7, 2013 research report.
 
“Marico is a leading Indian Group in Consumer Products & Services in the Global Beauty and Wellness space. Marico's Products and Services in Hair care, Skin Care and Healthy Foods generated a Turnover of about Rs. Rs. 40.0 billion (~USD 729 Million) in 2011-12. Marico markets well-known brands such as Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti, Mediker, Revive, Manjal, Kaya, Aromatic, Fiancee, HairCode, Caivil, Code 10 and Black Chic. Marico's brands and their extensions occupy leadership positions with significant market shares in most categories- Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment, Premium Refined Edible Oils, niche Fabric Care etc. Marico is present in the Skin Care Solutions segment through Kaya Skin Clinics (100 in India and The Middle East) and its soap franchise (in India and Bangladesh). Marico is present in more than 25 countries across Asia and the African continent. Marico's branded products are present in Bangladesh, other SAARC countries, the Middle East, Egypt, Malaysia and South Africa.”
 
“The Overseas Sales franchise of Marico's Consumer Products (whether as exports from India or as local operations in a foreign country) is one of the largest amongst Indian Companies and is entirely in branded products and services. In India, every month, over 70 mn consumer packs from Marico's Consumer Product Business reaches approx. 130 Million consumers in about 23 Million households, through a widespread distribution network of more than 3.3 million outlets. Marico India has nurtured brands that touch the lives of 1 out of 3 Indians. The company has recently acquired the erstwhile personal care business from Reckitt Benckiser. Marico now owns popular brands like Set Wet, Livon, Zatak, and other personal care brands thereby strengthening its portfolio for the youth and creating a significant presence in the male grooming and post hair wash segments.”
 
“The company’s net profit jumps to Rs.1022.93 million against Rs.841.18 million in the corresponding quarter ending of previous year, an increase of 21.61%. Revenue for the quarter rose 10.40% to Rs.11677.95 million from Rs.10578.16 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.1.59 a share during the quarter, registering 15.97% increase over previous year period. Profit before interest, depreciation and tax is Rs.1747.15 millions as against Rs.1309.86 millions in the corresponding period of the previous year.”
 
“At the current market price of Rs.220.10, the stock P/E ratio is at 35.12 x FY13E and 29.30 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 6.27 and Rs.7.51 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 19% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 21.34 x for FY13E and 18.15 x for FY14E. Price to Book Value of the stock is expected to be at 9.54 x and 7.20 x respectively for FY13E and FY14E. We recommend ‘BUY’ in this particular scrip with a target price of Rs 246 for medium to long term Investment,” says Firstcall Research report.

Public holding more than 90% in Indian cos

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