Buy Marico; target of Rs 350: Motilal Oswal

Motilal Oswal 's research report on Marico

Marico’s (MRCO) 4QFY20 sales were marginally below estimates on account of the COVID-19 led lockdown headwinds. However, EBITDA and margins were above estimates due to benign commodity costs and lower ad spends. Further, lower-than-expected tax rate led to the PAT beat. We believe that MRCO’s relatively resilient portfolio of products should help it weather the impact on sales and earnings decline in FY21, unlike several of its peers. Valuations appear attractive at 32x FY22E EPS, below 3/5/10-year average for a business that has better earnings visibility compared to peers. Maintain Buy.

Outlook

Nevertheless, valuations appear attractive at 32x FY22E EPS, below 3/5/10- year average of 44.9x/43x/35.5x, for a business that has better earnings visibility compared to peers. Maintain Buy with TP of INR350.