Buy Marico; target of Rs 645: Sharekhan

Buy

Sharekhan's research report on Marico

Marico’s Q2FY2024 performance mirrored Q1 with sluggish rural demand and inflationary pressures affecting the offtake. Consolidated revenues stood flat at Rs. 2,476 crore; OPM rose 272 bps y-o-y to 20.1% led to 17% y-o-y PAT growth to Rs. 360 crore. Volume offtake is expected to gradually improve in H2 as demand picks up prior to the festive season coupled with market share and penetration gains in key categories. Marico has maintained its medium-term guidance of 8-10% volume growth. Consolidated OPM is eyed at over 20% in FY2024 with strong expansion in gross margins. Premiumisation and scale-up in the food business are expected to drive consistent improvement in the medium term.

Outlook

Stock has corrected by 10% from its recent high and trades at 44x/38x its FY2024E/FY2025E earnings. We retain a Buy rating on the stock with an unchanged PT of Rs. 645.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Marico - 31 - 10-2023 - khan