 "After brief lull, mergers & acquisitions back on Marico's radar")
Marico zoomed over 9 per cent to hit a high of Rs 539.50 on heavy volumes in intra-day trades on Monday after the company reported steady Q4 earnings.
At 11:15 AM, the stock traded with a gain of 7.2 per cent at Rs 529. The counter had seen trades of around 2.62 lakh shares as against the two-week average volume of around 54,000 shares on the BSE. Meanwhile, the Sensex was up nearly a per cent at 61,624.
In the last two months, the stock has gained 12.5 per cent, and is now quoting near its 52-week high of Rs 554 registered in September 2022. Whereas, the benchmark index has gained 5 per cent since the end of March 2023.
For the quarter ended March 2023, Marico reported an 18.7 per cent growth in net profit at Rs 305 crore. In comparison, net profit for Q4FY22 stood at Rs 257 crore. Total income was up 5.6 per cent YoY at Rs 2,308 crore.
For the fiscal year 2022-23, net profit grew 5.3 per cent year-on-year to Rs 1,322 crore, backed by a 3.1 per cent increase in total income to Rs 9,908 crore.
Post earnings, Sharekhan in its earnings update has given a 'Buy' rating on the stock with target price of Rs 645 per share. The brokerage firm said, that the Q4FY23 performance was largely in line with expectation and management has maintained its medium-term guidance.
"Despite multiple headwinds, Marico delivered decent performance in FY2023, registering 3 per cent revenue and 5 per cent PAT growth coupled with 87 bps expansion in OPM. The company aims to improve domestic volume growth, strengthen market share across categories and sustain growth momentum in the international business to drive growth in the medium term. Expansion in margin will be driven by easing raw material prices, aggressive cost management and a favourable mix. The stock is currently trading at 39x/34x its Y2024E/ FY2025E earnings, which is at a discount to its five-year average multiple. We retain a Buy on the stock with an unchanged PT of Rs 645", the report stated.
Another domestic brokerage firm, Prabhudas Lilladher have upgraded its rating on the stock from 'Hold' to 'Accumulate' with target price of Rs 550 per share.
"We are increasing FY24/25 EPS estimates by 1.9 per cent/1.9 per cent and rating from Hold to Accumulate on account of improved EBITDA margin expansion guidance exceeding 100 bps in FY24." the report stated.
"We believe Marico is well placed given 1) benign prices of copra and stability in product pricing environment 2) sustained traction in new launches in Foods with entry in high growth categories of Peanut Butter & Munchies with target of achieving Rs 800 crore sales by FY24 and 3) increased focus on digital brands in HPC with aspiration of Rs 400 crore topline by FY24. We expect Sales/PAT CAGR of 11.4 per cent and 13 per cent over FY23-25 with payout ratio of ~90 per cent, ROE and ROCE of 48 per cent and 57 per cent.", the report added.
