Marico rating – Buy- Margins are getting better for company
时间:2024-06-29 04:01:44 阅读(143)
Marico’s Q1FY23 pre-quarterly update indicated subdued demand trends (similar to Q4FY22), mirroring overall FMCG industry demand, which was impacted by high retail inflation exerting pressure on consumers’ wallets. Consolidated Q1FY23F revenue should grow c.1% y-o-y. While India volumes declined in mid-single digits y-o-y (2yr/3yr CAGRs of 7%/flat), we note this was largely due to lower volumes in the edible oil category (on a high base, lower in-home consumption and downtrading owing to high inflation). Excluding edible oils, India business experienced a marginal volume growth.
Margins expand and getting better: Copra prices remained soft in Q1, leading to GPMs remaining flat q-o-q and improving y-o-y. Edible oil prices started to soften in end-Q1FY23 as global supplies began to ease, and should aid margin expansion in coming quarters. We estimate consolidated Q1FY23F revenue growth of c.1% y-o-y (vs Q1FY22: +31% y-o-y; Q4FY22: +7% y-o-y) and EBITDA/PAT growth of c.10%/6% y-o-y.
We believe Marico will continue to invest in brand-building for its new launches, especially in digital-first/D2C portfolios and in core franchises. We expect A&P spending to increase y-o-y. Management expects operating margin (OPM) to improve y-o-y (Q4FY22 OPM: 16.0%, Q1FY22 OPM: 19.0%).
Demand trends tepidConsolidated revenue: To grow marginally y-o-y. India business: Volume declined in mid-single digits y-o-y on a high Q1FY22 base of +21% y-o-y, mainly due to a sharp drop in Saffola edible oils, implying 2yr/3yr volume CAGR of c.7%/flat. Our Q1FY23F value growth:-4% y-o-y (2yr/3yr CAGR of 14%/3%; Q1FY22: +35% y-o-y).
Our viewDespite near-term softness in rural consumption, we view Marico as a strong beneficiary of a resilient core, and significant future growth vectors in new/recovering categories. We expect it to gain from: 1) a resilient core Parachute coconut oil portfolio that benefits across input cost trends; 2) new future growth engines: digital-first portfolio (Beardo, Just Herbs, Coco Soul, Pure Sense – targeting c.Rs 5 bn sales by FY24) and foods (oats, noodles, honey, Chyawan Amrut, soya chunks, peanut butter, mayonnaise – targeting c.Rs 8.5-10 bn sales by FY24) that we expect to scale up, and 3) a gradual turnaround in personal care/ VAHO categories aided by a price correction at the bottom of the pyramid and supported by economic recovery.We maintain our Buy rating and TP of `625 with a FY22-24F EPS CAGR of 20%. The stock currently trades at a P/E of 36x Mar-24F EPS of Rs 13.8.
上一篇:Market volatility, regulatory diktats play part- New client additions by brokers see marked decline
猜你喜欢
- Mandatory linking of e-invoice with e-way bill may cause operational disruption- Experts
- Wipro, HUL, ITC, JSW Steel, Ceat, AU SFB, IndusInd Bank, PVR, stocks in focus on F&O expiry day, 21 July 2022
- Nifty below 20-day SMA, signals weakness; Buy these two stocks to pocket near-term gains, charts show upside
- Manoj Vaibhav Gems ‘N’ Jewellers shares flat on debut; Should you hold or book profit-
- Multiple headwinds to drive used car sales to grow upto 25% in 2024
- Mandatory use of bio-gas by fertiliser units likely
- Maldives minister’s post on PM Modi’s Lakshadweep visit triggers massive row
- Will Nifty gain above 21,800 or dip further- See GIFT Nifty, FII data, F&O ban, crude, more before market opens
- Year-end story- Steady rise in crop output fails to ease import dependence