Marico Ltd.

Founded in 1987, Marico Ltd is a leading Indian Group in consumer products space. The company markets products in hair care, health foods and male grooming segments. Marico’s Indian business portfolio includes brands like parachute advansed, hair & care, nihar, mediker, saffola, revive, manjal, setwet, zatak and livon, while the global portfolio offers localized brands like parachute, hair code, fiancee, caivil, hercules, blackchic, code 10, ingwe, x-men, l’ovite and thuan phat. The company derives ~78% revenue from domestic market, while, the rest ~22% revenue comes from global operations. The company has presence in Egypt, South Africa, Middle East, Malaysia, Vietnam and Bangladesh, apart from India.

Valuation and view

Marico’s sharpened focus on growth drivers like food categories (oats) and youth brands (deodorants, hair gels, hair creams) is believed to yield fruitful result. The company’s management’s continuous focus towards deriving synergies from the unification of domestic and international business also makes us positive for an improved performance in the upcoming years. Further, we believe that cross pollination of different products will drive innovations and brands, especially in the youth portfolio. Demerger of low margin Kaya business makes it a pure play consumer company and thus the future prospects seem brighter for the company.

At a current CMP of Rs 369.9, Marico is attractively placed at EV/EBIDTA of ~22.5x FY16E, 35.2x FY16E P/E and 10.3 x FY15E P/B. Considering the above aspects, we rate the stock as ‘BUY’ with a target price of Rs 454, implying potential upside of ~22.7% for the coming 12 months.

Research Report Marico Ltd

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