MOSL: MARICO (Buy)-High visibility on volumes/margins strengthens outlook
MARICO: High visibility on volumes/margins strengthens outlook
(MRCO IN, Mkt Cap USD6.3b, CMP INR340, TP INR425, 25% Upside, Buy)
- 4QFY19 consol. net sales grew 8.7% YoY to INR16.1b (our estimate: INR16.6b). Domestic revenue increased ~6% YoY, led by volume growth of 8% YoY. Consol. EBITDA grew 12.2% YoY to INR2.8b (our estimate: INR3b). Adj. PAT rose 16.3% YoY to INR2.1b (our estimate: INR2.2b).
- gross margin expanded 240bp YoY to 49%. However, higher A&P costs (+160bp YoY to 9.5% of sales) and employee expenses (+30bp YoY to 7.3%) restricted EBITDA margin expansion to 50bp YoY (17.6% v/s our est. of 18%).
- FY19 performance: Sales, EBITDA and adj. PAT grew 16%, 13% and 14%, respectively. EBITDA margin contracted 50bp YoY to 17.5%.
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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