Buy Marico, target price Rs 490: Motilal Oswal

Motilal Oswal has buy call on Marico with a target price of Rs 490. The current market price of Marico Ltd. is Rs 403.25.

Marico Ltd., incorporated in the year 1988, is a Large Cap company (having a market cap of Rs 51967.35 Crore) operating in FMCG sector.

Financials
For the quarter ended 31-12-2020, the company reported a Consolidated Total Income of Rs 2146.00 Crore, up 6.45 % from last quarter Total Income of Rs 2016.00 Crore and up 15.81 % from last year same quarter Total Income of Rs 1853.00 Crore. Company reported net profit after tax of Rs 312.00 Crore in latest quarter.


Investment Rationale
MRCO has delivered an impressive double-digit volume growth in the domestic business. Growth in Parachute and continued rebound in VAHO are encouraging. The Foods and Edible Oils portfolio is likely to continue its growth momentum and focused launches driven by higher consumer focus on health and hygiene. The success of these new products will be critical for medium-term growth (though it has seen limited success so far). Outlook on its international business is also getting better. While material costs have seen sharp inflation, the company is well placed to offset the same through price increases and cost optimization. Valuations at 35.2x FY23E EPS appear comfortable for a business that has better earnings visibility over peers.

Promoter/FII Holdings
Promoters held 59.6 per cent stake in the company as of Dec 30, 2020, while FIIs held 24.3 per cent, DIIs 10.2 per cent and public and others 6 per cent.