The stock of FMCG player Marico has been on a roller-coaster ride since May. From declining 1 per cent on May 5 to jumping 8 per cent on May 8, the stock came close to its 52-week high on couple of occasions in the last few days.
With the IMD predicting a normal monsoon this year, the market sees an upside for Marico. Though the RBI Governor Shaktikanta Das has flagged concerns about El Nino uncertainties which may lead to food inflation impacting the performance of FMCG stocks on the bourses, the primary trend of Marico seems to be bullish as many analysts and brokerages are giving a Buy/Accumulate call on this stock.
Shares of Marico fell 0.79 per cent to ₹545.45 on Thursday. Earlier in the day, it hit an intra-day high of ₹551.10 – just 2.3 per cent away from its 52-week high price of ₹558.75.
Abhishek Jain, Head of Research, Arihant Capital, told businessline, “With declining raw material prices over the past few weeks and a promising outlook for FY24 based on management commentary post the Q4FY23 call, the stock has gained an impressive 15-17 per cent, making it a standout performer in the sector. As the pressure on raw material prices eases off, Marico is expected to witness improved margins in the future.”
The company’s value-added hair oil segment has also demonstrated strong growth, registering a remarkable 13 per cent increase and showcasing consecutive quarters of gross margin expansion. “Considering these factors, we maintain a positive outlook on Marico and recommend buying on market declines,” he added.
Profit-booking on Thursday
“The stock witnessed a rally of over 20 per cent since April, but over the past few days, it has witnessed profit booking and selling pressure at higher levels. Investors had moved into the defensives post global recession fears, and also on the back of strong consumer demand uptick,” said Aamar Deo Singh, Head Advisory, Angel One.
Gaurav Bissa, Vice-President of InCred Equities, told businessline: “One of the prominent reasons for a strong upside in Marico has been the strong breakout seen in Nifty FMCG index on the weekly charts. The stock has witnessed some profit booking today, which was also seen in many of the sectoral as well as broader market indices. However, the stock continues to trade comfortably above the breakout area implying further upside can be possible till it holds 520 levels. The stock can attempt fresh lifetime-high levels once it gives a weekly close above 560.”
Elara Securities has revised its ratings from Buy to Accumulate, while Prabhudas Lilladher recommends an Accumulate with a target price of ₹550.