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Motilal Oswal Report
Marico Ltd. shares could remain in focus after the FMCG major reported a strong set of Q1 FY27 numbers, led by double-digit volume growth in its domestic business and healthy international performance.
Encouraged by the company's growth outlook and improving portfolio mix, Motilal Oswal has reiterated its 'Buy' rating on the stock and maintained its target price of Rs 1,050, implying around 20% upside from current levels.
Valuation and view
Motilal Oswal largely maintain its Ebitda estimates for FY27 and FY28, but the company's lower tax rate guidance led to an increase in our EPS estimates for FY28.
Marico plans to cross Rs 15,000 crore in revenue in FY27 and Rs 20,000 crore by FY30. It aims to deliver a double-digit revenue CAGR over FY26-30, backed by strong volume growth and CC growth in teens in the international business with a mid-teen Ebitda CAGR.
Diversification is steadily improving the resilience of the international portfolio, with Bangladesh's revenue share declining from ~50% in FY20 to ~45% in FY26 and expected to reduce further to ~35% by FY30.
To improve its domestic distribution reach, Marico has also started Project SETU, which helps to drive growth in GT through a transformative expansion of its direct reach.
In line with its aim of delivering a double-digit revenue CAGR and a mid-teen Ebitda CAGR over FY26-30, the brokerage model a CAGR of 13% in revenue and 22% in Ebitda over FY26-28E.
Given the stable growth trajectory, diversifying revenue streams and strong focus on TAM expansion, Motilal Oswal believe the stock's premium valuation is likely to be sustained. Marico remains one of the brokerage's top picks in its coverage universe.
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