Sharekhan is bullish on Marico has recommended buy rating on the stock with a target price of Rs 395 in its research report dated December 23, 2019.
Sharekhan's research report on Marico
Slowdown in the domestic demand for consumer products and stiff competition from low-priced brands affected sales volumes of Parachute rigid packs and value-added hair oils in Q2FY2020. The company has undertaken required pricing actions by giving price-offs of Rs. 5 on the 100 ml and 250 ml packs, while Rs. 20 was slashed for Saffola Gold in December 2019. Price-offs in Parachute might revive sales volume of rigid packs, but recovery in value-added hair oils and Saffola edible oil will take time; we reduce earnings estimates by 4% and 9% for FY2020 and FY2021 to factor in slower revenue growth and lower-than-earlier expected OPM.
Stock has corrected by 14% in last three months factoring in near-term headwinds; retain Buy with revised PT of Rs. 395.
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