Marico hits two-month high; stock up 5%

Marico hits two-month high of Rs 319.55, up 5% on the National Stock Exchange (NSE) in otherwise range-bound market on back of heavy volumes. The Nifty 50 index was trading 0.27% higher at 10,121 points.

The trading volumes on the counter more than doubled with a combined 3.02 million shares changed hands on the NSE and BSE till 03:11 pm. The stock of fast moving consumer goods (FMCG) company 9% away from its all-time high of Rs 349 recorded on September 13, 2017 in intra-day trade.

Elara Securities recommend ‘accumulate’ rating on the stock with a target price of Rs 330 per share.

“Marico is a play on rural proxy as it has a strong brand in Parachute hair oil (PCNO), which is a play on converting loose to branded coconut hair oil. It is driving penetration in North and East India via low-cost Amla hair oil and loose mustard hair oil under Nihar Shanti Amla and Nihar Sarson Kesh Tel,” the brokerage firm said FMCG sector update.

With a 34% market leadership in value added hair oils (VAHO), the company is developing light hair oils with better fragrance to attract youth under Hair & Care. It is driving premiumization in edible oils via Saffola Aura Olive Oil (a fast-growing category as per eCommerce firm, Big Basket). The firm is expanding Saffola Masala Oats brand by driving in travel-related trade channels like airlines and vending machines in commercial set-ups. It is extending its soups portfolio and everyday protein supplement, Saffola Activ, it added.

The brokerage firm expects volume growth of 5-7% in PCNO, double-digit growth in VAHO and recovery in Saffola over FY18-20E.

We expect overall value growth of 15% pa, with an operating margin of 17-18% and a profit CAGR of 15% over FY18-20E, it added.

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