Sharekhan's research report on Marico
Marico's Q1FY2021 performance was better than our as well street expectations, largely led by ~300 bps expansion in consolidated OPM, resulting in 4% growth in adjusted PAT to Rs. 340.8 crore (better our expectation of Rs. 283.4 crore). Domestic sales volume decreased by ~14%, led by 11% volume decrease in parachute rigid packs and 30% volume decline in value-added hair oil (VAHO) portfolio. Saffola edible oil registered 16% volume growth. The month of June saw recovery in sales of Parachute rigid pack and VAHO portfolio, Saffola edible oil is expected to maintain the good run, while margin expansion is expected to sustain due to benign input prices and lower ad spends.
We have revised upwards our earnings estimates by ~6% and ~4% for FY2021 and FY2022, respectively. We maintain our Buy recommendation on the stock with a revised price target of Rs. 420.
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