Accumulate Marico; target of Rs 391: Arihant Capital

Arihant Capital 's research report on Marico

Marico’s Q1FY21 earnings were above our estimates on all fronts. Consolidated revenue stood at Rs 19,250 mn, above our estimate of Rs 18,470 mn, registering a growth of +28.68% QoQ/-11.13% YoY. Reported EBITDA grew by +65.60% QoQ/+0.86% YoY to Rs 4,670 mn, above our estimate of Rs 3,694 mn, while EBITDA margin expanded by 541bps QoQ/288bps YoY, aggressive cost control and rationalization of A&P spends in few discretionary portfolios on a lower topline, will lead to expansion of operating margins compared to the corresponding quarter last year. PAT for the quarter grew by +94.97% QoQ/+25.16% YoY to Rs 3,880 mn, beating our estimate of Rs 2,741 mn.

Outlook

We value the stock at a target P/E of 38.5x to its FY22E, which yields a target price of Rs 391 per share. We maintain our Accumulate rating on the stock.

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