Buy Marico; target of Rs 1000: Emkay Global Financial

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Strong volume growth: Marico's 2QFY27 results showed 10% domestic volume growth, led by 13% growth in Parachute and 21% growth in VAHO.
  • Favorable portfolio mix: The company's focus on premium products and rationalization of low-margin SKUs has led to a favorable portfolio mix, contributing to gross margin expansion.
  • Project SETU: Marico's distribution expansion and execution improvement project has increased direct reach by over 1.5x and nearly doubled the number of rural stockists, supporting volume growth.
  • Growth portfolio: The company's growth portfolio, including foods and premium personal care, is scaling up and expected to deliver 20-25% growth.

Thesis Validation Checklist

To validate the investment thesis, watch for:

  • Sustained volume growth: Marico's ability to maintain strong volume growth, particularly in Parachute and VAHO.
  • Margin expansion: The company's ability to expand margins through favorable portfolio mix and procurement advantages.
  • International growth: Improvement in international growth, particularly in Bangladesh, and the company's ability to sustain mid-teens growth.
  • SETU implementation: The successful implementation of Project SETU and its contribution to volume growth and margin expansion.