Hold Marico; target of Rs 681: Prabhudas Lilladher

hold

Prabhudas Lilladher's research report on Marico

MRCO reported inline nos with surprise on GM led by benign input costs & favorable portfolio mix. However we downgrade stock to Hold from Accumulate given 1) Peaked out margin with no major expansion expected in near term 2) Persistent sluggishness in Parachute/Saffola/VAHO (72% of domestic sales) 3) Growth concerns in Bangladesh given recent turmoil and unrest. Innovation funnel remains strong with portfolio diversification and scale up in Foods, D2C portfolio & B2C acquisitions. Beardo is likely to end FY25 with double-digit EBITDA margins, MRCO plans to adopt the same strategy for scaling Digital-first franchises and targets double-digit margins by FY27.

Outlook

We factor in 11.7% sales growth & 10.4% PAT CAGR over FY24-26 We value MRCO at 46x Sep’26 EPS and assign a target price of Rs681 (Rs621 earlier). Downgrade to Hold.

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Marico - 060724 - prabhu