Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Marico (MRCO IN, INR 131, Buy)
n Revenues robust, backed by strong volume growth
Marico’s Q3FY11 revenues rose ~22.1% Y-o-Y, to INR 8.17 bn, against our estimate of
INR 7.8 bn. Volume growth was robust at 15% Y-o-Y. PAT jumped 11.8% Y-o-Y, to INR
695 mn (our estimate of INR 640 mn).
n Parachute and Saffola volumes sturdy
Parachute and Saffola volumes grew ~5% and 13% Y-o-Y, respectively. The company’s
international business continued to grow handsomely, up ~33%
Y-o-Y, driven by ~25% volume growth and ~8% price-led growth. However, due to 5%
INR appreciation, overall reported growth was 28%.
n Kaya: Revenue growth rises; international business shines
Kaya skin clinics posted revenue growth of 40% Y-o-Y, to INR 620 mn in Q3FY11,
bolstered by same store clinic sales growth of ~11% Y-o-Y ( reversal in trend with ~3%
same clinic growth decline last quarter). Kaya (excluding Derma Rx) incurred a loss of
INR 9 mn at the PBT level (against 35mn loss in Q2FY11). In Q4FY11, while Kaya plans
to add 1-3 clinics in the Middle East, it is unlikely to open any new clinic in India. In
Q3FY11, one clinic each was opened in Middle East. As per the company, acquisition of
Derma Rx helped the Kaya business to post operating profit of INR 41 mn.
n EBITDA flat; margins decline
Marico yielded EBITDA of INR 997 mn. EBITDA margin dipped 256bps Y-o-Y. Lower A&P,
staff costs and other expenditure contributed 176bps, 27bps and 77bps, respectively.
These savings were offset by higher COGS which jumped 536bps in Q3FY11. The
company’s primary focus is on growing its brand franchise rather than increasing
margins.
n Outlook and valuations: Fairly valued over near term; maintain ‘BUY’
Marico is eyeing growth through low unit packs (LUPs), rural markets, focus on noncoconut
hair oil and new product initiatives in the food segment under Saffola. Kaya’s
domestic business, which, we believe, is an overhang in the near term, is a key concern
however reversal in trend is visible. Also, the last price hike (~7% in December) taken
by the company had minimum impact in the current quarter due to low priced inventory
pipeline; in Q4FY11, the company will have full benefit of the same. Also, the company
expects the Copra price to correct in near future. Hence, we maintain our ‘BUY’
recommendation on the stock. On relative return basis, the stock is rated ‘Sector
Performer’.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Marico (MRCO IN, INR 131, Buy)
n Revenues robust, backed by strong volume growth
Marico’s Q3FY11 revenues rose ~22.1% Y-o-Y, to INR 8.17 bn, against our estimate of
INR 7.8 bn. Volume growth was robust at 15% Y-o-Y. PAT jumped 11.8% Y-o-Y, to INR
695 mn (our estimate of INR 640 mn).
n Parachute and Saffola volumes sturdy
Parachute and Saffola volumes grew ~5% and 13% Y-o-Y, respectively. The company’s
international business continued to grow handsomely, up ~33%
Y-o-Y, driven by ~25% volume growth and ~8% price-led growth. However, due to 5%
INR appreciation, overall reported growth was 28%.
n Kaya: Revenue growth rises; international business shines
Kaya skin clinics posted revenue growth of 40% Y-o-Y, to INR 620 mn in Q3FY11,
bolstered by same store clinic sales growth of ~11% Y-o-Y ( reversal in trend with ~3%
same clinic growth decline last quarter). Kaya (excluding Derma Rx) incurred a loss of
INR 9 mn at the PBT level (against 35mn loss in Q2FY11). In Q4FY11, while Kaya plans
to add 1-3 clinics in the Middle East, it is unlikely to open any new clinic in India. In
Q3FY11, one clinic each was opened in Middle East. As per the company, acquisition of
Derma Rx helped the Kaya business to post operating profit of INR 41 mn.
n EBITDA flat; margins decline
Marico yielded EBITDA of INR 997 mn. EBITDA margin dipped 256bps Y-o-Y. Lower A&P,
staff costs and other expenditure contributed 176bps, 27bps and 77bps, respectively.
These savings were offset by higher COGS which jumped 536bps in Q3FY11. The
company’s primary focus is on growing its brand franchise rather than increasing
margins.
n Outlook and valuations: Fairly valued over near term; maintain ‘BUY’
Marico is eyeing growth through low unit packs (LUPs), rural markets, focus on noncoconut
hair oil and new product initiatives in the food segment under Saffola. Kaya’s
domestic business, which, we believe, is an overhang in the near term, is a key concern
however reversal in trend is visible. Also, the last price hike (~7% in December) taken
by the company had minimum impact in the current quarter due to low priced inventory
pipeline; in Q4FY11, the company will have full benefit of the same. Also, the company
expects the Copra price to correct in near future. Hence, we maintain our ‘BUY’
recommendation on the stock. On relative return basis, the stock is rated ‘Sector
Performer’.
No comments:
Post a Comment