Accumulate Marico; target of Rs 787: Prabhudas Lilladher

Prabhudas Lilladher's research report on Marico

We have increased our FY27/FY28 estimates by 2.3%/3.0% given 1) healthy demand outlook for 2H 2) Sustained market share gains across key portfolio. 3) Focus on urban-centric and premium portfolio drive margins post 2HFY26 and 4) Innovation funnel remains strong with portfolio diversification and scale up in Foods, D2C portfolio & B2C acquisitions. Company remains committed towards Sustained investment in Foods with 25%+ CAGR in sales, supported by scaling existing franchises and continued innovation. MRCO delivered 30.7% revenue growth along with ~7% volume growth led by prices hikes in core portfolio amidst sharp inflation in key input prices, robust growth in Foods and Premium Personal Care along with sustained recovery in VAHO despite impact of GST transition. Beardo has double-digit EBITDA margins whereas Plix has maintained its strong momentum. MRCO plans to adopt the same strategy for scaling Digital-first franchises and targets double-digit margins by FY27.

Outlook

Given sharp spike in copra prices, MRCO has taken another price increase in Q226. We expect margins to remain under pressure until Q4 even as improving profits in Foods and B2C will provide some respite. However, we expect margins to improve post 2HFY26 driven by premiumization with strong sales momentum in B2C & Foods and revival of growth in VAHO. We estimate a CAGR of 15.9% in EPS over FY26-28. We value MRCO at 48x Sep27 EPS and assign a target price of Rs 787 (Rs 778 earlier). Retain Accumulate.