After Marico’s Q2 FY25 results sparked investor and analyst optimism, the stock surged over 9% to Rs 687 per share. Major brokerages are bullish, with targets suggesting a potential 27% upside. Marico’s quarterly performance met expectations, showing steady growth, particularly in its core segments and international markets.
Brokerages Set High Targets
Jefferies and Nomura issued ‘buy’ ratings on Marico, setting ambitious price targets. Jefferies set a target of Rs 800, and Nomura targeted Rs 760, indicating strong growth potential. Nomura highlighted that Marico’s premium and mass-market urban exposure helped it avoid demand slowdowns, while strategic price adjustments have reinforced growth even in a competitive market.
Strategic Price Increases Drive Performance
Price hikes for flagship products like Parachute and Saffola Oils were central to Q2’s success. Parachute saw a 10% price increase, translating to mid-single-digit volume growth and a market share boost. Saffola Oils had a 15% hike, with minimal volume loss, showing Marico’s brand loyalty among consumers. Growth in premium personal care, digital-first brands, and the food sector further demonstrated Marico’s comprehensive product approach, adding to its revenue potential.
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Jefferies’ Optimism on Volume Growth
Jefferies echoed Nomura’s optimism, giving a ‘buy’ rating with a target price of Rs 800. It noted Marico’s 5% volume growth in India, primarily driven by rural demand, which outpaced urban growth for the third straight quarter. Marico’s management remains optimistic about continued rural and urban demand in upcoming quarters, although Jefferies warned that inflationary pressures could impact margins if costs rise.
Financial Performance in Q2 FY25
Marico reported a 20% year-on-year net profit increase to Rs 433 crore, with revenue up 7.4% YoY to Rs 2,664 crore, driven by consistent demand. Operationally, EBITDA rose 5% YoY, demonstrating effective cost management and stable demand. The company saw mid-single-digit volume growth domestically, with international operations achieving low-teen growth in constant currency, highlighting Marico’s strong global brand presence.
Outlook and Growth Potential
Marico’s success this quarter reflects its ability to navigate challenges and capitalize on growth opportunities. Rural growth complements urban market stability, and the demand for essential and premium products is robust. Marico’s pricing strategy and diverse product mix are paying off, indicating sustainable growth. Analysts believe that if inflation remains under control, Marico can maintain or improve margins, positioning it well for long-term gains.
Key Takeaways
- Strong Q2 Performance: 20% profit increase and 7.4% revenue growth.
- Bullish Ratings: High price targets from Jefferies and Nomura.
- Effective Pricing Strategy: Price increases bolstered volume growth with minimal demand impact.
- Rural and International Demand: Rural markets and global operations continue driving growth.
- Long-Term Outlook: Despite inflation risks, Marico’s diversified portfolio and strategic focus make it a promising long-term investment.
With sustained domestic and international demand, analysts are optimistic about Marico’s future, projecting potential upside for investors holding their positions.
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