MOSL: MARICO (Neutral)-Results broadly in line, margin pressures to continue
Marico: Results broadly in line, margin pressures to continue; Maintain Neutral
(mrco IN, Mkt Cap USD6.0b, CMP INR310, TP INR345, 11% Upside, Neutral)
- Marico’s 3QFY18 sales grew 15.1% YoY to INR16.2b (est. of INR16.1b). Domestic volume growth stood at 9.4% YoY (est. of +12%), while overall volume growth was 7% YoY. Domestic revenue grew 19% YoY, while reported international revenue increased 1% YoY (+9% on a constant currency basis).
- gross margin contracted 540bp YoY to 46.5%, mainly as copra costs were up 91% YoY. EBITDA increased 10.7% YoY to INR3b (est. of INR2.9b), with the margin shrinking 70bp YoY (est. of -100bp) to 18.6%. Adj. PAT rose 16.5% YoY to INR2.2b (est. of INR2.1b).
- Segmental growth: Parachute sales grew 41% YoY, with 15% volume growth (est. of +20%); Saffola sales declined 4% YoY, with flat volume growth (est. +10%); and Value Added Hair Oils (VAHO) sales grew 7% YoY, with 8% volume growth (est. of +12%). There was 26% realization increase YoY in Parachute; realization in VAHO was down 1% and in Saffola was down 4% YoY.
- 9MFY18 consolidated sales, EBITDA and adj. PAT stood at +5.2%, -1.6% and +0.6% YoY, respectively.
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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