Buy Marico; target of Rs 810: Emkay Global Financial

Emkay Global Financial's research report on Marico

For its India business, we see doubledigit sales growth momentum sustaining ahead, with the organic business maintaining high single-digit growth (gradual shift from price to volume-driven growth), while new initiatives remain accretive. With expectation of better management of deflation in coconut oil and edible oil prices, we see margins improving for the core portfolio from 2HFY26E. Concurrently, dilution from new initiatives would gradually subside. Given better topline and control on margins, we lift earnings by 5-9% over FY26-27E. On improved execution, we raise our target P/E to 50x (13% premium to the last 5Y avg fwd P/E of 44x) from 47x.

Outlook

We upgrade Marico to BUY from Add, and raise Mar-26E TP by ~16% to Rs 810 (from Rs700), given FY25 management aspirations have been already realized and execution is continually improving.