Anand Rathi's research report on Marico
With a 9% rise in domestic volumes (vs. the Street’s 8%) and a 20.1% EBITDA margin (vs. 20.3% est.), Marico posted good revenue but a weaker operating performance. Management, though, was optimistic of high single digit volume growth, led by its core categories, GT revival via Project SETU, and new businesses. Also, with higher prices of Parachute (up 60%) and Saffola, management guided to >25% revenue growth in FY26, and doubledigit profit growth in two years. The price of copra have fallen 12% from its Jul peak, which along with price hikes should help gradual margin recovery in coming quarters. We introduce FY28 figures and raise our FY26e/27e EPS 4%/8% to factor in higher volumes, pricing and the VAHO revival. We turn bullish on the company on a) revival in its core portfolio aided by Project Setu, b) consistent volume delivery aided by digital brands & premium PC (22% of revenue) and c) potential cyclical margin reversion next year on the copra-price fall.
Outlook
Thus, we raise the stock to a Buy, with a higher 12-mth TP of Rs850, 47x Sep’27e EPS (earlier Rs710, 45x FY27e EPS).
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