Marico Share Price: Marico share price jumped nearly 6 per cent to touch 52-week on Tuesday’s trading session after ICICI Securities has upgraded the consumer goods company stock to “buy” from “add” and revised the target price to Rs 670 from Rs 610, an upside of 19 per cent.
The brokerage firm upgraded the rating based on a slew of factors. The volume growth in Parachute Coconut Oil is expected to improve, revenue from the food segment is likely to be more than that from the edible oil business and the focus on D2C brands would be on profitably scaling up, analysts at ICICI Securities said in an October 1 note.
The FMCG player is eyeing medium-term volume growth of around 8 per cent, which, ICICI Securities flagged as a positive, saying it indicates the ambition to grow faster on a larger base.
ICICI Securites has also revised Marico share price target to Rs 670 from Rs 610, up 9.9 per cent. In its analysis, the brokerage stated the following views after meeting with Saugata Gupta, MD & CEO of Marico. The main points from the conversation were that Marico aims for medium-term volume growth of roughly 8 per cent (as compared to revenue growth of 8 per cent in FY2013-2023).
The brokerage stated that it valued the company’s driveto expand more quickly while maintaining its current market share. The brokerage projected that volume growth for Parachute Coconut Oil (PCNO) would be aided by stable copra prices and a recovery in rural consumption.
The brokerage said that the level of competition in the value-added hair oil market at the bottom of the pyramid (BOP) has stabilised. While Saffola anticipates holding the threshold margin while maintaining stable growth in edible oil, this, together with incremental premiumisation efforts, may assist value growth in value-added hair oil (VAHO) steadily increase.
According to the brokerage, over the medium future, revenue from the food segment is anticipated to surpass that of the edible oil industry. With less susceptibility to cyclical commodity prices, operating margin volatility may be decreased. For D2C companies, this would mean a greater emphasis on scaling up profitably by leveraging distribution and marketing resources.
“We maintain our earnings estimates for FY24-25E, modelling revenue / EBITDA / PAT CAGR of 9 / 16 / 16 ( per cent) over FY23-25E. We upgrade to BUY (from ADD) with a revised DCF-based target price of INR 670 (vs previous TP of INR 610). At our target price, the stock will trade at 49x P/E multiple Mar’25E. Key downside risk: Higher-than-expected inflation in copra prices,” said ICICI Securities in its report.
On the technical front, as per Trendlyne data, Marico stock price rose 7.88 per cent and outperformed its sector by 1.91 per cent in the past year.
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