Target: ₹585

CMP: ₹542.55

Marico’s commentary on the Q2 topline sounded weaker than our expectations, while that on profitability was in line.

We now build in about 1 per cent consol. revenue decline vs earlier expectation of about 2 per cent growth (incl. 1 per cent contribution from Plix). Lower growth in Q2 is largely owing to the weak show in domestic edible oil, wherein Marico saw a low single-digit volume growth vs our estimate of a high single-digit growth.

Overall domestic revenue is likely to decline about 2 per cent, with volume growth to come in at around 2.5 per cent. We see nearly 11 per cent constant currency growth in Marico’s international business, while our reported INR growth estimate is about 3 per cent. Consol. EBITDA margin would expand by 220 bps YoY to around 19.5 per cent.

With reference to its commentary on the topline trajectory in H2, management has guided for a gradual growth recovery as the price decline tapers off. Also, an update on new initiatives (foods and digital brands) is key for recovery.

We see EBITDA/earnings growth at 12/13 per cent, respectively.

We maintain Hold with a Sep-24E TP of ₹585, based on 42x P/E (in line with its last 5Y historical avg fwd P/E).

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