Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Marico Ltd - Q2FY21 Result Update - YES Securities

Posted On: 2020-10-29 05:47:39


Improving growth outlook in international, Saffola and Parachute, margin headwinds temporary; stock at 33x poised for a re-rating

- Quarter highlights- 9% revenue growth, 11% domestic volume growth, 7% growth in international business, margins up 30bps despite 160bps GM decline due to cost saving initiatives and lower A&P Spends driving PAT growth of 15%, 95% portfolio back to positive growth, rural growth higher than urban, E-commerce strong while MT and CSD remain subdued, strong volume growth trends with Parachute (10%), VAHO (4%), Saffola (20%) and foods saw 55% value growth, multiple launches in immunity segment, hygiene portfolio contribution at 1.5% now cooling off, international growth led by 16% growth in Bangladesh.

- Outlook - Confident of delivering 8-10% volume growth for 2HFY21, medium-term volume growth target of 5-7% in Parachute, VAHO growth to pick up in 2H from 4% in in 2Q, corrective measures in Saffola should help sustain high single-digit volume growth, foods to reach 450-500cr revenue in FY22, near-term muted outlook for premium personal care but medium term target of double-digit growth remains. Overall medium term target of 8-10% volume growth and 13-15% revenue growth, target 150cr cost savings in FY21, margins to be above 20% for FY21 and above 19% in medium term.

- Gross margin outlook - Increase in input costs (especially copra up 10%) not passed on to drive share gains given expectation of some downtrading; expect input costs to start softening from January; cost measures till then will offset the impact.

- Saffola - 62% of growth attributed to increased penetration on account of new users and increased retention which should help sustain strong growth going forward; market share moving up given higher promotions, strong brand equity and reasonable pricing.

- Coconut oil vs Value added hair oils - Parachute witnessing much better trends given lower rural share and gains from unbranded, VAHO dynamics different, premium part is impacted more by COVID restrictions and competition is more intense.

- Channel inventory - Currently at lowest level of distributor inventory in last 3-4 years to help enhance distributor ROIs; reduced number of SKUs and improved fill rates.

- Saffola brand equity in organic and immunity portfolio - Leveraging strong equity in health segment, Saffola will remain master brand for honey and oats, will create new sub-brand for ayurvedic products.

- E-commerce channel outlook - Has reached 8% given acceleration due to COVID; digital adoption from consumer is rapidly increasing both for selecting and buying; will launch a few more digital-only brands like Beardo; GT channel also undergoing transformation.

- International business - Doing really well in Bangladesh led by aggressive portfolio diversification; will try and replicate the same model now in Vietnam which should start showing results in 4Q; both high-growth markets.

- Marketing spends - 1Q was all about availability where spends were held back; took conscious decision to increase promotions and A&P spends in 2Q.

- Cost savings program - Focused on structural savings rather than temporary measures; should deliver 150cr plus in FY21

- Valuation and view - The stock is currently trading at 33x FY23E earnings and given a quicker than expected recovery in the hair oil portfolio, deserves some amount of re-rating in our view. Margin headwinds should abate from January, which in addition to strong growth in foods, Saffola and international markets should support a solid growth trajectory for next 2-3 years.

Shares of MARICO LTD. was last trading in BSE at Rs.362.15 as compared to the previous close of Rs. 363.1. The total number of shares traded during the day was 122655 in over 4119 trades.

The stock hit an intraday high of Rs. 364.8 and intraday low of 355.4. The net turnover during the day was Rs. 44261413.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Auto Sector - Monthly Volume Round-up - Nov 20 - Reliance Securities

What do brokerages say on Burger King India Limited's IPO?

The Phoenix Mills - Potential fund infusion may usher in growth - ICICI Securities

Godrej Agrovet - Beneficiary of 60% increase in palm oil prices - ICICI Securities

Automobiles (wholesale) - Wholesale dispatches rise amidst modest retail trends - ICICI Securities

Oil & Gas - Sector Update - Dec 2020 - ICICI Direct

Phoenix Mills (Buy): Asset monetisation at favourable terms... - ICICI Direct

Aditya Makharia's views on November Auto Sales Number for November 2020 - HDFC Securities

Burger King India - IPO Review - ICICI Direct

Quant Pick - LIC Housing Finance - ICICI Direct

Tech Mahindra - Analyst Meet Update - ICICI Direct

Gladiator Stocks - Crompton Greaves Consumer Electricals - ICICI Direct

Derivatives Monthly Outlook - Nifty support at 12800 for ongoing momentum...

Quant Pick - Sun Pharmaceuticals - ICICI Direct

Monetary Policy - Expectation from YES Securities

Sector Update on Asset Management Companies - Subdued but improvement expected - HDFC Securities

Pre Monetary Policy View - Dec, 2020 - Lakshmi Iyer, President and CIO (Debt) & Head Products, Kotak Mutual Fund

Maintain REDUCE on Siemens - Smart recovery priced in - HDFC Securities

Banking Sector Credit Trends - Growth continues to moderate - HDFC Securities

Q2 FY21 GDP: Light at the end of the tunnel - YES Securities

Siemens - Q4 FY20 Result Update - YES Securities

Super action in Home Loans - SBIN, ICICIBC, AXSB, HDFC and LICHF gaining share - YES Securities

Polymer price tracker - Dec 1, 2020 - PVC prices continue to tread higher - ICICI Securities

Bajaj Finance - Company Update - Dec 2020 - ICICI Direct

Siemens Ltd - Healthy revival in orders and margins - ICICI Securities

Covid Recovery Pulse - Nov 30, 2020 - Festive positivity continues in auto retails, e-way bill generation improves...

Derivatives Weekly View (November 27): Momentum expected to continue in broader markets with Nifty support at 12800...

Derivatives Strategy - Positional Option - ICICI Direct

Preview on RBI Monetary Policy - December 2020 - Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank

10 things you should know about Burger King India Limited

Views of HDFC Securities and Acuité Ratings & Research on Q2FY21 GDP Numbers

Rollover Report for November 2020 - December 2020: Angel Broking

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019