Buy Marico; target of Rs 645: Sharekhan

Buy

Sharekhan's research report on Marico

Marico’s Q1FY2024 performance was soft, affected by significant trade destocking in Saffola Edible Oils and channel inventory adjustments in core portfolios. Revenue declined by 3% y-o-y, while adjusted PAT grew by 11% y-o-y, led by sharp margin expansion. Volume offtake is expected to improve from Q2 with improved consumer demand. Growth is likely to recover in the positive trajectory in H2FY2024 (we expect growth to be in low double digits). Consolidated OPM is expected to be >20% in FY2024 with strong expansion in gross margins. Premiumisation and scale-up in the food business are expected to drive consistent improvement in the medium term.

Outlook

The stock trades at 47x/41x its FY2024E/FY2025E earnings. We retain our Buy rating on the stock with an unchanged PT of Rs. 645

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Marico - 31 -07 - 2023 - khan