Stock recommendations: Buy Marico, target price Rs 550: ICICI Direct

ICICI Direct has buy call on Marico with a target price of Rs 550. The current market price of Marico Ltd. is Rs 516.05.
Time period given by analyst is one year when Marico Ltd. price can reach defined target.

Marico Ltd., incorporated in the year 1988, is a Large Cap company (having a market cap of Rs 66821.80 Crore) operating in FMCG sector.

Marico Ltd. key Products/Revenue Segments include Edible Oil, Others, Personal Care, Export Incentives, Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 2429.00 Crore, down -.61 % from last quarter Total Income of Rs 2444.00 Crore and up 13.19 % from last year same quarter Total Income of Rs 2146.00 Crore. Company reported net profit after tax of Rs 317.00 Crore in latest quarter.

Investment Rationale
Marico is expected to post 9% revenue growth led by 26.5% growth in international business and 4.6% growth in domestic business. The company has registered small increase in volumes in India business in Q4. Parachute is expected to see small volume degrowth whereas VAHO segment is likely to witness low single digit value growth. The strong growth is Saffola is mainly due to sharp price hikes taken in last one year to pass on steep inflation in vegetable oil. It expects volume de-growth in Saffola edible oil. Foods & digital brand continues to grow at a stronger pace despite high base. The brokerage expects flat gross margins given dip in copra prices & aggressive price hikes taken in last six months. With the increase in marketing spends, operating margins are likely to contract 52 bps to 15.3%. Net profit is expected to grow 6.1% to Rs 240.9 crore.

Promoter/FII Holdings
Promoters held 59.51 per cent stake in the company as of 31-Dec-2021, while FIIs owned 25.55 per cent, DIIs 8.58 per cent.