MOSL: MARICO (Buy)-Performance in-line, outlook remains robust
Marico: Performance in-line, outlook remains robust
(MRCO IN, Mkt Cap USD6.6b, CMP INR364, TP INR470, 29% Upside, Buy)
- net sales grew 14.6% YoY to INR18.6b (our estimate: INR18.1b) in 3QFY19. Domestic revenue increased ~13% YoY, with 5% volume growth. EBITDA grew 15.8% YoY to INR3.5b (in-line). Adj. PAT increased 12.7% YoY to INR2.5b (in-line).
- gross margin shrank 40bp YoY to 46.3%. However, EBITDA margin expanded 20bp YoY to 18.8% (our estimate: 19.1%), led by lower consol. A&P expenses (-20bp YoY to 8.8% of sales) and other expenditure (-50bp YoY to 12.2%), partly offset by higher staff costs (+20bp YoY to 6.5%).
- 9MFY19 performance: Sales, EBITDA and adj. PAT grew 18.2%, 12.7% and 13.3% YoY, respectively. EBITDA margin contracted 90bp YoY to 17.4%.
- Concall highlights: (1) Management expects 15-20% decline in copra costs from the flush season, starting Mar'19. MRCO is unlikely to take price cuts now. (2) FY20 guidance: 10% volume growth in India business, double-digit CC sales growth in international business, and over 18% EBITDA margin.
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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