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ICICI Securities Report
Over the last few years, Nestle India Ltd. and Jyothy Laboratories Ltd. delivered volume outperformance thanks to activating the sales growth vector effectively (numeric distribution expansion and improved line selling).
Marico, with its new urban distribution (expansion) strategy and likely outperformance in D2C brands, has material potential to outperform in FY24-26E. Apart from this, it is focusing on improving distributor return on investment, better credit terms, range, assortment, etc.
Multiple initiatives such as reduction in channel inventory, discontinuation of inefficient trade schemes etc. are being undertaken. Within core categories-
Parachute coconut oil's volume growth trajectory is likely to improve with stability in copra prices,
competitive intensity remains high in value added hair oil (we expect it to get better), and
calibrated growth in Saffola edible oil with threshold margin.
Diversified portfolio of premium personal care, foods (low penetration) and digital-first brand portfolio (offline expansion) is expected to grow at 20% in the medium term.
Further, it plans to achieve double-digit Ebitda margin in its digital-first brands portfolio in the medium term. Buy.
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