Accumulate Marico; target of Rs 440: Dolat Capital Market

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Dolat Capital Market's research report on Marico

Marico’s Q3FY21 revenues and EBITDA exceed, but APAT came in line with our estimates. India business posted 18% revenue growth with 15% volume increase. VAHO reported 21% value and volume growth – double digit volume growth after ten consecutive quarters. Sustainability of double digit growth would be key for margin performance, going ahead. Saffola continues to outperform with 26/17% value/volume growth. Consumer up-stocking helped the brand to post better growth during the quarter. GM contracted 220bps during the quarter due to sharp increase in copra prices. The company has implemented 5% price hike to mitigate inflation. We believe that the growth in Saffola would normalize here on, while VAHO is expected to improve on favorable base.

Outlook

We have tweaked our FY21/22/23E EPS estimates at Rs 9.2/9.8/10.4 respectively to factor in Q3 performance. Valuing the stock at 43x FY23E EPS to arrive at a TP of Rs 440. Maintain Accumulate.

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