ICICI Direct is bullish on Marico has recommended buy rating on the stock with a target price of Rs 425 in its research report dated May 07, 2019.
ICICI Direct's research report on Marico
The India business witnessed volume growth of 8% YoY driven by robust volumes from the Saffola led by high promotion & media spends. Gross margins expanded 239 bps on account of a 19% decline in copra prices in addition to 9% and 3% decline in HDPE and LLP, respectively. As a result, operating margins increased 54 bps but a 148 bps increase in advertisement spends restricted improvement in margins. The company reported a net profit of Rs 405 crore including tax write back of Rs 188 crore from previous years. Adjusting for that, net profit grew 18.5% to Rs 217 crore.
We expect categories like male grooming, serums, hair nourishment and foods to have a significantly higher share in the next five years. Hence, we upgrade the stock to BUY recommendation with a target price of Rs 425/share.
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