Marico - 4QFY2012 Result Update - Angel Broking

For 4QFY2012 Marico posted a 22.8% yoy growth in its consolidated net sales, in-line with our esimates. Operating margin for the quarter rose by 144bp yoy aided by reduction in copra prices. Adjusted profit for the quarter stood at Rs.71cr slightly ahead of our estimates. We maintain our Neutral view on the stock.

Key highlights during the quarter: Overall volume growth for the quarter stood at 17%, while Organic volume growths stood at 13% Volume growth in the consumer products business in India stood at ~10.3%, with Parachute(rigid packs) reporting ~11.1% yoy volume growth and Saffola (refined edible oil) growing by ~3.3% yoy. During the quarter, Saffola's volume was affected by a planned reduction in promotional volumes and a stock correction in the Canteen Stores Department (CSD). During FY2012, Parachute improved its market share in the coconut oils segment by 130bps. The international business grew by 37% yoy during the quarter, with organic and inorganic growth coming in at 24% and 13% respectively.

Outlook and valuation: Going ahead, we expect Marico to post healthy growth both in its domestic and international businesses aided by the strong brands. The recent acquisitions made by the company too are expected to fuel its future growth. At the CMP, the stock is trading at 22x FY2014E EPS. We believe the stock is fairly priced and hence, recommend Neutral on the stock.

Source : Equity Bulls

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