Buy Marico; target of Rs 425: ICICI Direct

ICICI Direct's research report on Marico

Marico posted healthy Q1FY20 results with 6% YoY volume growth led by strong 9% & 7% volume growth in parachute & VAHO segment, respectively. However, Saffola continue to record sluggish volume growth of 3%. Strong growth in Parachute has been propelled by higher A&P spend towards the brand. With 520 bps gross margin expansion, the company has leveraged additional cash flows towards higher promotional spend. Despite 32% increase in A&P spend, operating margins expanded 380 bps to 21.3%. Net profit grew 21.2% YoY to Rs 314.5 crore.


Moreover, benign RM cost would continue to help the company maintain elevated margins. We estimate sales & earnings CAGR of 11.4% & 16.2%, respectively. We maintain our BUY recommendation with a target price of Rs 425/share.

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tags #Buy #ICICI Direct #Marico #Recommendations

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