Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Marico has announced the sale of its edible oil brand Sweekar to Cargill.
Sweekar was never a focus brand for Marico and the management had
stated its intention of divesting the brand a few years back. The transaction
could have also been forced due to the high sunflower oil prices which is
the key raw material for sweekar. Marico's other edible oil brand,Saffola,
uses Khardi oil, Rice bran oil and corn oil. Saffola has been growing volumes
in double digits and continues to remain the focus area for the company.
Over the last 2 years, Marico had launched 2 low price variants of Saffola -
Saffola Active and Saffola Tasty to make the brand sweekar somewhat redundant
for them. The two brands together are roughly 25% of saffola's
portfolio.We estimate that the sweekar sales would have been close to INR
1700 mn, 5%-6% of overall sales.
Cargill had earlier bought "Rath" brand from Agrotech foods. Rath was also
a non-focus brand for Agrotech. The annual sales of Rath were reported to
be about 1200 mn and the company reported a profit of INR 1750mn from
the transaction as exceptional income in 3QFY11.
Marico has outperformed sensex by about 16.9% y-t-d on expectations of
copra prices falling down from historic levels due to the start of the flush
season. Although the fall in prices have been lower than expected, all vegetable
oil prices have started to show a downward trend including Palm oil,
sunflower oil, soyabean oil, rapesead oil etc. Falling vegetable oil prices
benefits Marico the most as the company operates at the permium end of
all the segments that it operates in. The gross margins of Parachute is
40-45% and for saffola is 30-35% as against 10%-30% for the competition
We maintain Buy with a target price of INR 150 per share.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Marico has announced the sale of its edible oil brand Sweekar to Cargill.
Sweekar was never a focus brand for Marico and the management had
stated its intention of divesting the brand a few years back. The transaction
could have also been forced due to the high sunflower oil prices which is
the key raw material for sweekar. Marico's other edible oil brand,Saffola,
uses Khardi oil, Rice bran oil and corn oil. Saffola has been growing volumes
in double digits and continues to remain the focus area for the company.
Over the last 2 years, Marico had launched 2 low price variants of Saffola -
Saffola Active and Saffola Tasty to make the brand sweekar somewhat redundant
for them. The two brands together are roughly 25% of saffola's
portfolio.We estimate that the sweekar sales would have been close to INR
1700 mn, 5%-6% of overall sales.
Cargill had earlier bought "Rath" brand from Agrotech foods. Rath was also
a non-focus brand for Agrotech. The annual sales of Rath were reported to
be about 1200 mn and the company reported a profit of INR 1750mn from
the transaction as exceptional income in 3QFY11.
Marico has outperformed sensex by about 16.9% y-t-d on expectations of
copra prices falling down from historic levels due to the start of the flush
season. Although the fall in prices have been lower than expected, all vegetable
oil prices have started to show a downward trend including Palm oil,
sunflower oil, soyabean oil, rapesead oil etc. Falling vegetable oil prices
benefits Marico the most as the company operates at the permium end of
all the segments that it operates in. The gross margins of Parachute is
40-45% and for saffola is 30-35% as against 10%-30% for the competition
We maintain Buy with a target price of INR 150 per share.
No comments:
Post a Comment