Hold Marico; target of Rs 355: Prabhudas Lilladher
Prabhudas Lilladher recommended Hold rating on Marico with a target price of Rs 355 in its research report dated July 27, 2020.
July 30, 2020 / 04:44 PM IST
Prabhudas Lilladher's research report on Marico
MRCO seems cautiously optimistic on medium term prospects led by market share gain across portfolio and strong growth in Foods and Bangladesh. Although some of the trends like double digit volume growth in edible oils and Oats and significant pressure on VAHO looks temporary, some near term gains from unorganized players looks likely as MRCO looks to cut Parachute prices given moderately benign Copra price outlook. MRCO is betting big on Foods and Hygiene, however aspiration of Rs5bn sales looks stretched target. We expect margin expansion to moderate in coming quarters as ad spends savings would be 100-150bps in balance year as against 300bps in 1Q.
We estimate 11.1% PAT CAGR over FY20-23 as we tweak our estimates by 4-6%. We value the stock at 35xFY22 EPS with a target price of Rs355 (Rs337 based on 35xSept22 EPS earlier). Retain Hold.
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