Accumulate Marico; target of Rs 743: Prabhudas Lilladher

Prabhudas Lilladher's research report on Marico

MRCO delivered 22% revenue growth along with ~9% volume growth led by prices hikes taken in Parachute, robust growth in Foods and Premium Personal Care along with sustained recovery in VAHO. IBD continues to grow strong with ~19% CCG and is also focusing on improving mix by reducing reliance on Bangladesh and aspirations for double-digit CCG over medium term. Innovation funnel remains strong with portfolio diversification and scale up in Foods, D2C portfolio & B2C acquisitions. Foods are poised for 25%+ CAGR, supported by scaling existing franchises and continued innovation. Exit ARR for FY27 is now projected at ~2.5x FY24 ARR. Beardo has double-digit EBITDA margins whereas Plix has broken even. MRCO plans to adopt the same strategy for scaling Digital-first franchises and targets double-digit margins by FY27.

Outlook

Although we expect near term volatility, strong sales momentum in B2C, Foods and revival of growth in VAHO are positive. We estimate a CAGR of 12% in EPS over FY25-27. We value MRCO at 47x June27 EPS and assign a target price of Rs 743(Rs718 earlier). Retain Accumulate.