Comments
Prabhudas Lilladher
Marico Ind (Accumulate)
CMP: ₹403.65
Target: ₹437
Marico Industries’ Q2FY16 domestic sales continued to remain impacted by 4 per cent volume growth in Saffola Oils portfolio while IBD was impacted by 11 per cent sales decline in Bangladesh and 4 per cent in Egypt.
Growth outlook seems better in 2Q led by gains from 1) Six per cent price cut in domestic parachute portfolio; 2) New launches in hair oils and Livon ₹s5 pack; 3) Increased focus on Saffola Activ and Tasty blend in entry segment; 4) portfolio restaging in Haircode (Egypt), X-men (Vietnam) and Parachute Gold (West Asia).
Copra, LLP, HDPE prices are benign and will support margins even as Rice Bran and Safflower oil prices are inching up. We estimate profit after tax (PAT) compound annual growth rate (CAGR) of 19 per cent over FY15-18 with sustained return on equity (ROE) of 30 per cent and ROCE of 45 per cent. Marico’s intent to undertake overseas acquisitions is negative in our view, given poor track record in acquisitions. Long-term outlook appears steady. Maintain ‘Accumulate’.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.