Sharekhan's research report on Marico
Q4FY2023 performance is expected to be better on account of expected recovery in the sales of Parachute, led by relevant pricing action, strong growth in Saffola, and consistent margin improvement in the backdrop of correction in input prices. Well placed to achieve a 15% earnings CAGR over FY2022-FY2025E, driven by 6-8% volume growth in the core portfolio and strong scale-up in foods/D2C businesses. Any significant uptick in revenue and margins led by emerging businesses might further boost earnings. Current valuation of 38x/35x its FY2024E/FY2025E earnings is at a discount to its last five years’ average multiple of 42x, providing scope of entering into quality consumer goods play with a favourable risk-reward ratio with a 12-month horizon.
Outlook
We maintain Buy on Marico with an unchanged PT of Rs. 645. Underperformance to broader indices for the past year, better earnings visibility vs. peers in a soft demand environment, and an attractive valuation of 38x/35x its FY2024E/FY2025E earnings makes it a better pick in the consumer goods space.
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