Buy Orkla India; target of Rs 800 ICICI Securities

ICICI Securities research report on Orkla India

Orkla India, led by its strong legacy brands MTR and Eastern, enjoys a dominant market share in its core states of Karnataka, Kerala, AP and Telangana. Its deep understanding of regional tastes gives it a strong competitive moat. Operating across spices and convenience foods, it is expected to deliver steady domestic growth driven by increasing household penetration in core markets and product portfolio expansion. Exports (21% of revenue) remain a key growth lever with 22% share in branded spice exports and rising demand from the global Indian diaspora. Margin expansion and cash flow generation are expected from operational efficiencies and a better product mix, driving a meaningful improvement in underlying ROCE.

Outlook

With room for selective acquisitions and continued focus on execution, we initiate coverage on Orkla India with BUY rating and DCF-based TP of INR 800. Risks: Commodity volatility and unorganised competition.