Hold Marico; target of Rs 718: Prabhudas Lilladher

Prabhudas Lilladher's research report on Marico

MRCO managed to deliver double-digit growth in FY25 led by Foods and Premium Personal Care revenue share increasing to ~22% in FY25 (11% in FY11) and double-digit INR sales growth in international business. Innovation funnel remains strong with portfolio diversification and scale up in Foods, D2C portfolio & B2C acquisitions. Beardo has ended FY25 with double-digit EBITDA margins whereas Plix has delivered low single digit EBITDA margin. MRCO plans to adopt the same strategy for scaling Digital-first franchises and targets double-digit margins by FY27. IBD is also focusing on improving mix by reducing reliance on Bangladesh and increasing sales of premium personal care. Given that copra prices are yet to soften until 1Q26, MRCO has taken another price increase (8-9% in process and 30% overall).

Outlook

We expect margins to remain under pressure until 1HFY26 even as improved profits in Foods and B2C will provide some respite. We increase FY27EPS by 4.5% and estimate a CAGR of 11.9% in sales and 11.5% in EPS over FY25-27. We value MRCO at 47x FY27 EPS and assign a target price of Rs 718. Retain Accumulate.