Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Positive volume surprise
Marico’s 1Q consol. net earnings rose 15% YoY, 13% ahead of estimates
entirely led by higher than expected revenues with underlying volume
growth of 14% despite sharp price hikes. Ebitda margins declined 260bps
due to surge in input costs (mainly copra). While we like Marico’s
leadership position in its core categories, the 27ppt ytd outperformance
and 28x one year forward PE multiple already builds in the optimism on
copra price correction. Maintain U-PF (revised target: Rs150/sh).
1QFY12 net earnings ahead of estimates
Marico’s consol. net earning rose 15% YoY to Rs850m, 13% ahead of
estimates driven completely by topline which rose 33% YoY (numbers not
strictly comparable, though). Ebitda rose 9% YoY to Rs1.25m and margins
contracted 260bps to 11.9% due to input cost pressures. Interest and
depreciation rose 40% each while other income more than doubled. Tax rates
at 19.6% were up 335bps YoY but were in-line with estimates.
Strong topline growth, a key positive
Marico’s strong topline was the key positive from the result with strong
underlying volume growth (+14%; acquisition added another 7%). Domestic
business too recorded strong 47% like-to-like revenue growth with 15%
underlying volume growth. While Parachute oil grew by 10% in volumes,
Saffola grew by 15% and hair oils by 32% which was commendable in the
context of significant price hikes (30%+ weighted average). International
business grew 26% YoY with organic growth in constant currency at 20%.
Key input copra shows volatile trend
Marico’s key input, copra continued to see upward trend and moved up 5%
QoQ during 1Q. The company however maintained price points in Parachute
in the interest of sustaining volume growth which was the key reason for a
550bps YoY contraction in gross margins. While copra prices in July came off
20% cf. June, in the last week, prices moved up 10% again. Impact on Ebitda
was lower, thanks to lower A&P (-215bps) and operating leverage. For the full
year, FY12, we continue to model in a 50bps YoY decline in Ebitda margins.
Valuations build in optimism, maintain Upf; revised target: Rs150/sh
We maintain our earnings estimates and highlight that our estimates already
build in a correction in input prices; implied earnings growth comes to 19%
YoY for the subsequent three quarters in FY12. We raise our target price to
Rs150/sh valuing the stock at 23x FY13xCL estimates. We believe that 3-
month outperformance of 27ppt and 28x one year forward PE already builds
in optimism on copra price correction. Maintain Upf.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Positive volume surprise
Marico’s 1Q consol. net earnings rose 15% YoY, 13% ahead of estimates
entirely led by higher than expected revenues with underlying volume
growth of 14% despite sharp price hikes. Ebitda margins declined 260bps
due to surge in input costs (mainly copra). While we like Marico’s
leadership position in its core categories, the 27ppt ytd outperformance
and 28x one year forward PE multiple already builds in the optimism on
copra price correction. Maintain U-PF (revised target: Rs150/sh).
1QFY12 net earnings ahead of estimates
Marico’s consol. net earning rose 15% YoY to Rs850m, 13% ahead of
estimates driven completely by topline which rose 33% YoY (numbers not
strictly comparable, though). Ebitda rose 9% YoY to Rs1.25m and margins
contracted 260bps to 11.9% due to input cost pressures. Interest and
depreciation rose 40% each while other income more than doubled. Tax rates
at 19.6% were up 335bps YoY but were in-line with estimates.
Strong topline growth, a key positive
Marico’s strong topline was the key positive from the result with strong
underlying volume growth (+14%; acquisition added another 7%). Domestic
business too recorded strong 47% like-to-like revenue growth with 15%
underlying volume growth. While Parachute oil grew by 10% in volumes,
Saffola grew by 15% and hair oils by 32% which was commendable in the
context of significant price hikes (30%+ weighted average). International
business grew 26% YoY with organic growth in constant currency at 20%.
Key input copra shows volatile trend
Marico’s key input, copra continued to see upward trend and moved up 5%
QoQ during 1Q. The company however maintained price points in Parachute
in the interest of sustaining volume growth which was the key reason for a
550bps YoY contraction in gross margins. While copra prices in July came off
20% cf. June, in the last week, prices moved up 10% again. Impact on Ebitda
was lower, thanks to lower A&P (-215bps) and operating leverage. For the full
year, FY12, we continue to model in a 50bps YoY decline in Ebitda margins.
Valuations build in optimism, maintain Upf; revised target: Rs150/sh
We maintain our earnings estimates and highlight that our estimates already
build in a correction in input prices; implied earnings growth comes to 19%
YoY for the subsequent three quarters in FY12. We raise our target price to
Rs150/sh valuing the stock at 23x FY13xCL estimates. We believe that 3-
month outperformance of 27ppt and 28x one year forward PE already builds
in optimism on copra price correction. Maintain Upf.
No comments:
Post a Comment