Purchase Marico; aim for 645 rupees: Sharekhan
In its research report dated October 30, 2023, Sharekhan, who is positive on Marico, advised a buy recommendation on the company with a target price of Rs 645.
Sharekhan's Marico study report
Marico's Q2FY2024 performance was similar to Q1, with the offtake being impacted by inflationary pressures and weak rural demand. Total sales remained unchanged at Rs. 2,476 crore; OPM increased 272 basis points year over year to 20.1%, resulting in a 17% increase in PAT to Rs. 360 crore. In H2, volume offtake is anticipated to progressively improve as demand increases ahead of the holiday season and as market share and penetration increase in important categories. Marico has not altered its medium-term volume growth projection of 8–10%. In FY2024, consolidated OPM is expected to reach above 20% with significant growth in gross margins. In the medium run, steady progress is anticipated to be fueled by premiumization and scale-up in the food industry.
Prospects
After a 10% correction from its previous peak, the stock is now trading at 44x/38x its FY2024E/FY2025E earnings. With a PT of Rs. 645 that hasn't moved, we continue to recommend buying the stock.
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