Hold Marico; target of Rs 532: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Marico

We change our EPS estimates by 0.1%/-1.9%/-3.8% on account of lower realisations and milder margin expansion. Volume growth at 4% in 3Q23 was enabled by price stability across trade & sequentially improved rural demand. We believe rural demand should turn positive in 4Q and new launches in Foods/HPC over the 12 months will also aid volumes. We believe MRCO is well placed to accelerate growth due to 1) price cuts in Parachute on range bound Copra prices 2) launch of new products in mid-sized but high growth categories of Peanut butter and Mayo 3) improved price value equation of Saffola in edible oils post recent price correction 4) success of new launches in foods with objective of Rs8.5-10bn sales by FY24 and 5) increased focus on digital brands in HPC with aspiration of Rs4.5-5bn topline by FY24 (Rs2- 2.5bn in FY23).

Outlook

We expect Sales/PAT CAGR of 8.5% and 13.7% over FY22-25. We value the stock at 42xDec24 EPS and assign a target price of Rs532 (531 based on 42xSept24 EPS earlier) given healthy ROE/ROCE of 43.0%/53.0% and 90+% dividend payout. Recommend Hold.

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Marico - 06 -02 - 2023 - prabhu