Accumulate Marico; target of Rs 364: Dolat Capital
Dolat Capital recommended accumulate rating on Marico with a target price of Rs 364 in its research report dated July 27, 2020.
July 30, 2020 / 07:01 PM IST
Dolat Capital's research report on Marico
Marico’s Q1FY21 revenues came in line, but EBITDA and APAT exceed our estimates. India business posted 15% revenue decline with 14% volume de-growth. Barring VAHO (-4.9%), Parachute (+1.9%) and Saffola (+9.5%) reported positive volume CAGR over last 3 years, was encouraging. Saffola continues to outperform with 16% value/volume growth. Consumer up-stocking helped the brand to post better growth during the quarter. A +140bps YoY improvement in GM and 300bps decline in A&P spends helped operating margins to expand. Going ahead, we expect mild inflation in copra prices but A&P spends are likely to remain low. We also believe that Parachute volumes would recover faster, as the secondary sales continue to remain positive.
We maintain our FY21E and FY22E EPS estimates at Rs 8.5 and Rs 9.1 respectively. Valuing the stock at 40x FY22E EPS to arrive at a TP of Rs 364. Maintain Accumulate (Buy on Dips).
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