MOSL: MARICO (Buy)-Demand outlook improving-focus on technology paying off-Rural growth and food inflation are the key
​MARICO: Demand outlook improving; focus on technology paying off; Rural growth and food inflation are the key monitorables
(MRCO IN, Mkt Cap USD5.8b, INR292, TP INR335, 15% Upside, Buy)
We met management of Marico (MRCO) to understand the company’s distribution and rural strategy. Key takeaways:
- ​We were impressed with the pioneering use of technology, which gives the company a competitive edge in terms of rural expansion.
- The focus on technology helps to not only make working capital and cost structure leaner, but also generate significant data for analysis (e.g. demand forecasting). The company is looking to tie up with startups offering data mining analytics.
- The demand outlook has improved sharply for the company, as mentioned by management during its 3QFY17 results announcement. EPS growth could perk up in FY18 if monsoon is normal this year, given that government schemes to boost rural consumption and a weak base of rural growth over past few years have already raised the earnings prospects.Â
Marico is a consumer products company operating in the beauty and wellness space. Co. has multiple brands in the categories of hair care, skin care, health foods, male grooming, and fabric care. Co.'s India business markets household brands such as Parachute Advansed, Saffola, Hair & Care, Nihar, Mediker, Revive, Manjal, Setwet, Zatak and Livon among others. The International business offers brands such as Parachute, Hair Code, Fiancee, Caivil, Hercules, BlackChic, Code 10, Ingwe, X-Men, L'Ovite and Thuan Phat.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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