On Wednesday, BofA Securities revised its price target for Marico Ltd (NS:MRCO:IN), a leading Indian consumer goods company, to INR715.00, down from the previous INR730.00. Despite the reduction, the firm maintained a Buy rating on the stock.
The adjustment follows Marico's second-quarter financial results for the fiscal year 2025, which demonstrated consistent business improvement and met the firm's expectations. "Good growth momentum; pricing should drive better 2HFY25, unlike many peers", the analyst noted.
Marico's performance stood out against many of its peers, showing resilience to the broader consumption weakness observed in the Indian market. BofA Securities anticipates that Marico's specific portfolio factors and strategic efforts toward diversification will continue to shield the company from market challenges.
Stable volume growth is expected to persist for Marico, supported by price increases implemented to counteract the inflationary pressures from raw materials like copra and vegetable oils.
The analyst from BofA Securities highlighted that these price adjustments are likely to contribute to an acceleration in revenue growth in the second half of the fiscal year 2025. Unlike other categories affected by high inflation rates, Marico's earnings are predicted to face minimal impact.
The management has expressed confidence in managing a 40-50 basis points year-over-year cost increase and expects that the EBITDA margin contraction should be limited to 40-50 basis points year-over-year for the fiscal year 2025 estimate.
In conclusion, Marico's growth trajectory is projected to outperform most of its competitors. The company's ongoing initiatives in enhancing distribution, diversification, scaling up overseas operations, and controlling costs are seen as positive drivers for its future performance.
