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B u s i n e s s g r o w t h o n t r a c k …
Marico’s Q2FY12 results were in line with our estimates with the topline
witnessing a 25.1% jump YoY to | 974.5 crore (I-direct estimate: | 994.8
crore). Margins for the company continued to remain under pressure on a
YoY basis and declined by 77 bps to 12% (I-direct estimate: 12%) from
12.7% in Q2FY11. However, with the price increases taken during the
year, margins on a QoQ basis did not witness any further decline and
remained stable. Though Marico’s topline witnessed a significant jump,
PAT growth remained moderate at 9.4% YoY to |78.3 crore (I-direct
estimate: | 81.9 crore) on the back of higher depreciation, interest cost
and taxes paid during the quarter.
ƒ Revenue growth across all businesses
Marico’s topline growth of ~25% during the quarter was contributed by
growth across all its business units. The Indian consumer products
business (CPB) posted a growth of ~44% YoY to | 667 crore with volume
growth being ~14%. The international business group (IBG) recorded
sales of | 241 crore, posting growth of ~19% YoY (after currency
fluctuations) and a business growth of ~33% (aided by the inclusion of
sales of ICP’s acquisition). Lastly, Kaya’s same store sales also continued
to witness sustained growth of ~16% YoY in Q2FY12 and stood at |66.2
crore.
V a l u a t i o n
At the CMP, the stock is trading at 27.8x and 21.8x its FY12E and FY13E
EPS of | 5.4 and | 6.9, respectively. With the company’s ability to
maintain strong volume growth, ~14% YoY, despite the price increases;
we believe sales growth would continue to remain strong, going ahead.
Further, with the prices of the company’s key raw materials, copra (down
by ~11% QoQ) and coconut oil, having begun to soften from their peak,
we expect margins to also improve from here on. Hence, we remain
positive on the company’s business growth and value the company at
24x its FY13E EPS assigning it a target price of | 165, with a BUY rating.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
B u s i n e s s g r o w t h o n t r a c k …
Marico’s Q2FY12 results were in line with our estimates with the topline
witnessing a 25.1% jump YoY to | 974.5 crore (I-direct estimate: | 994.8
crore). Margins for the company continued to remain under pressure on a
YoY basis and declined by 77 bps to 12% (I-direct estimate: 12%) from
12.7% in Q2FY11. However, with the price increases taken during the
year, margins on a QoQ basis did not witness any further decline and
remained stable. Though Marico’s topline witnessed a significant jump,
PAT growth remained moderate at 9.4% YoY to |78.3 crore (I-direct
estimate: | 81.9 crore) on the back of higher depreciation, interest cost
and taxes paid during the quarter.
ƒ Revenue growth across all businesses
Marico’s topline growth of ~25% during the quarter was contributed by
growth across all its business units. The Indian consumer products
business (CPB) posted a growth of ~44% YoY to | 667 crore with volume
growth being ~14%. The international business group (IBG) recorded
sales of | 241 crore, posting growth of ~19% YoY (after currency
fluctuations) and a business growth of ~33% (aided by the inclusion of
sales of ICP’s acquisition). Lastly, Kaya’s same store sales also continued
to witness sustained growth of ~16% YoY in Q2FY12 and stood at |66.2
crore.
V a l u a t i o n
At the CMP, the stock is trading at 27.8x and 21.8x its FY12E and FY13E
EPS of | 5.4 and | 6.9, respectively. With the company’s ability to
maintain strong volume growth, ~14% YoY, despite the price increases;
we believe sales growth would continue to remain strong, going ahead.
Further, with the prices of the company’s key raw materials, copra (down
by ~11% QoQ) and coconut oil, having begun to soften from their peak,
we expect margins to also improve from here on. Hence, we remain
positive on the company’s business growth and value the company at
24x its FY13E EPS assigning it a target price of | 165, with a BUY rating.
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