EUR 120.00 For Business Accounts Only

MOSL: Morning India (16/March/20): 1. Marico (Sharp correction offers buying opportunity; Upgrade to Buy); 2. Fund Folio (Gross inflows in equities at 11-month high); 3. Oil & Gas; 4. Telecom; 5. EcoScope

Morning India (16/March/20):

Today’s top research idea
Marico: Sharp correction offers buying opportunity
** After the requisite (albeit admittedly delayed) price action in its largest brand, Parachute (~30% of sales), Marico's (MRCO) overall volume growth outlook appears relatively better than peers of its size.

** Further, demand for brands like Parachute, Saffola, VAHO and youth products are unlikely to be significantly affected by the Coronavirus.

** While raw material costs are not declining as they were 6 months ago, near-term YoY outlook is highly attractive for its key raw materials.

** The stock has corrected ~35% since we downgraded MRCO to Neutral at the end of 2QFY20 results.

** Trailing FY20 valuations of 32.2x FY20E EPS and FY21/FY22 valuations of 33.4x/27.5x FY22E respectively are much lower than 3-year/5-year/10-year average of 44.8x/42.7x/ 35.2x respectively. We upgrade the stock to 'Buy' with TP of INR315. Given the uncertain environment, we have attributed a target multiple of 35x, close to its 10-year average; yet, we have obtained 21% on the stock.

Piping hot news
Federal Reserve cuts rates to zero and launches $700 billion quantitative easing program
The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.