Buy Parent Stock Of Parachute & Saffola: Global Business Ticked Double-Digit Growth: Motilal Oswal

Marico's (MRCO) international business has delivered double-digit constant currency growth in 2QFY23. All markets have continued to exhibit strength and contributed positively. Marico's major brands are Parachute, Saffola, Saffola FITTIFY Gourmet, Saffola ImmuniVeda, Saffola Mealmaker, Hair & Care, Parachute Advansed, Nihar Naturals, Mediker, Coco Soul, Revive, Set Wet, Livon and Beardo and Just Herbs. On that ground, top brokerage firm Motilal Oswal is suggesting investors to buy the stock of Marico.

Stock To Buy: Target Price

The Current Market Price (CMP) of Marico Limited is around Rs. 529. Motilal Oswal has estimated a Target Price for the stock at Rs. 620. This stock has the potential to give a 17% return, in the upcoming 1 year. It is a large-cap stock with a market capitalization of around Rs. 68,190 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 529
Target Price	Rs. 620
Potential 1 year return	17.00%
52 week high share price	Rs. 607.70
52 week low share price	Rs. 455.65

Sales momentum

After achieving a sales CAGR of ~6% over FY15-20, the sales momentum has been better now than that in the past, with double-digit sales CAGR expected over FY20-24. This is likely to sustain beyond FY24 as well, led by the ongoing revenue growth momentum in each of MRCO's core segments, significantly higher growth rates as well as targets in the Foods portfolio, and the Rs. 4.5-5b targeted from its 'digital first' range of products.

Stock Valuation

According to Motilal Oswal, "The much-needed diversification can lead to higher multiples than that in the past. Valuations at 52x/42.3x FY23E/FY24E EPS appear inexpensive, given the potential of strong earnings growth (v/s earlier) and a healthy RoE in the late 30s. We maintain our Buy rating on the stock with a target price of Rs. 620." Higher crop realization and a festive season should boost demand.

Company Portfolio

Marico is one of India's leading consumer products companies in the global beauty and wellness space. During FY 2021-22, Marico recorded a turnover of about Rs. 95 billion through its products sold in India and chosen markets in Asia and Africa. They are present in over 25 countries across emerging markets of Asia and Africa. We operate seven factories in India, located at Puducherry, Perundurai, Jalgaon, Guwahati, Baddi, and Sanand.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.