Marico shares surged around 10 percent on May 7 as the company’s quarterly numbers promoted rating upgrades for the stock. Nuvama has upgraded the stock to 'buy' while City raised its target price on the stock. Motilal has a 'buy' rating on the stock with a target price of Rs 625 per share.
As of May 7, Bloomberg showed 31 analysts have a buy rating on Marico stock, 8 have a hold rating and 3 have a sell call.
Marico reported a consolidated net profit of Rs 320 crore in Q4, up 5 percent from the year-ago period. Its revenue increased 1.7 percent YoY to Rs 2,278 crore. EBIDTA was a slight miss at Rs 442 crore. Although tepid, these numbers were overall in line with analyst expectations.
Yet, the bullishness among analysts stems from the overall turn in the demand scenario as well as the commitment exhibited by the management to increase volumes and gain market share.
The earnings picture showed that the premium and urban-centric segments stayed ahead of the rural and mass segments, but rural sentiment saw a revival toward the quarter's end.
According to analysts at Motilal Oswal, the improvement in the rural market, market share gain, accelerated growth in foods and premium personal care, healthy growth in international business, and the normalization of price cuts should help Marico deliver better revenue in FY25-26.
The company management is optimistic about growth revival in FY25 and expects double-digit revenue growth, driven by healthy volume growth. To improve its distribution reach, it has also started “Project SETU,” which helps to drive growth in general trade through a transformative expansion of its direct reach.
The company has been sustaining double-digit EBITDA growth, and analysts at Motilal Oswal estimate a 10 percent EPS CAGR over the next two financial years.
International brokerage Citi also reiterated its 'buy' recommendation on Marico but raised the target price to Rs 610 per share. Analysts anticipate an improvement in Marico's growth trajectory for FY25, driven by accelerated volume growth and pricing-led strategies.
The continued focus on new product developments and innovations is seen as beneficial for overall growth, they said.
Additionally, the strong growth in the international business is expected to contribute positively to the company's performance, the brokerage said.
Marico’s digital-first portfolio continues to rack up strong revenue growth, and the company aims to expand it further along with improved profitability. In the international business too, Bangladesh has started recovering.
Nuvama has turned bullish on the stock, upgrading it to 'buy' from 'hold' earlier with a raised target price of Rs 640 per share. The brokerage believes the company needs to get more aggressive on innovation and push its products across channels.
Rural demand, which has been a laggard for the FMCG industry for the last year, is expected to revive in FY25 with the onset of a likely strong monsoon.
Marico has an over 30 percent salience of rural and would be a beneficiary of this revival in rural demand, according to Nuvama. Local competition, which was a pain point last year, will now be in the base and competition will cool off as raw material prices are stabilizing, it said.
It is worth noting that Copra, which is a key raw material for Marico, has started to inch up. "With copra prices rising, Marico witnesses pricing growth, which will ensure better operating leverage and profitability for Marico," the brokerage said.
On the contrary, CLSA still has a 'sell' call on Marico with a target price of Rs 460 per share as analysts are questioning whether this margin improvement comes at the expense of growth.
Marico has been expanding its distribution through 'Project Setu', aiming to address core category issues, which continue to face structural challenges, the brokerage noted.
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