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Subdued performance…
Marico reported a subdued set of numbers for Q4FY11. During the
quarter, the company’s topline grew ~24% YoY to | 747.3 crore led by
~5% volume growth and ~19% value growth. The spiralling raw material
costs continued to strain the margins that dipped considerably by ~350
bps and stood at 10.5% in comparison to 14.1% in Q4FY10. However, in
spite of a dip in EBITDA, the bottomline of the company grew by ~| 20
crore and stood at | 71.6 crore. This was led by the inclusion of the sale
proceeds from the sale of Sweekar (exceptional item) and certain onetime
adjustments accounted for during the quarter.
Highlights of the quarter
Marico consolidated the revenues (~| 15 crore) of ICP Corporation to
its topline during the quarter. On the bottomline front, the company
included | 36.2 crore and | 19.6 crore under the head of exceptional
items as proceeds from the sales ‘Sweekar’ and reversal of provision
for excise duty, respectively. Also, the company’s interest cost and
depreciation were considerably higher during the quarter on the back
of certain one time adjustments accounted for in the quarter.
Valuation
At the CMP of | 138, the stock is trading at 29.8x and 24.7x its FY12E and
FY13E EPS of | 4.6 and | 5.6, respectively. Though we expect Marico’s
sales to grow at ~19% CAGR from FY11-13E on the back of increasing
contribution from Saffola and the international business, we believe rising
raw material prices and higher advertisement spends would continue to
keep margins under pressure. Also, with the Kaya business (organic)
continuing to witness slower growth than expected and still posting
losses (at the PAT level), we prefer to maintain a cautious view on the
stock as higher interest costs could continue to strain the margins. Hence,
we have valued the stock at 24x its FY13E EPS of | 5.6. We have assigned
the stock a HOLD rating and a target price of | 134.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Subdued performance…
Marico reported a subdued set of numbers for Q4FY11. During the
quarter, the company’s topline grew ~24% YoY to | 747.3 crore led by
~5% volume growth and ~19% value growth. The spiralling raw material
costs continued to strain the margins that dipped considerably by ~350
bps and stood at 10.5% in comparison to 14.1% in Q4FY10. However, in
spite of a dip in EBITDA, the bottomline of the company grew by ~| 20
crore and stood at | 71.6 crore. This was led by the inclusion of the sale
proceeds from the sale of Sweekar (exceptional item) and certain onetime
adjustments accounted for during the quarter.
Highlights of the quarter
Marico consolidated the revenues (~| 15 crore) of ICP Corporation to
its topline during the quarter. On the bottomline front, the company
included | 36.2 crore and | 19.6 crore under the head of exceptional
items as proceeds from the sales ‘Sweekar’ and reversal of provision
for excise duty, respectively. Also, the company’s interest cost and
depreciation were considerably higher during the quarter on the back
of certain one time adjustments accounted for in the quarter.
Valuation
At the CMP of | 138, the stock is trading at 29.8x and 24.7x its FY12E and
FY13E EPS of | 4.6 and | 5.6, respectively. Though we expect Marico’s
sales to grow at ~19% CAGR from FY11-13E on the back of increasing
contribution from Saffola and the international business, we believe rising
raw material prices and higher advertisement spends would continue to
keep margins under pressure. Also, with the Kaya business (organic)
continuing to witness slower growth than expected and still posting
losses (at the PAT level), we prefer to maintain a cautious view on the
stock as higher interest costs could continue to strain the margins. Hence,
we have valued the stock at 24x its FY13E EPS of | 5.6. We have assigned
the stock a HOLD rating and a target price of | 134.
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