Dalal Street Investment Journal – July 20, 2019

10 DALAL STREET INVESTMENT JOURNAL I JULY 22 - AUG 4, 2019 DSIJ.in^

M

arico Ltd. is a

prominent consumer

products company

which operates across

the dimensions of

global beauty and wellness. It offers an

elaborate portfolio of products covering

hair care, skin care, edible oils, health

foods, male grooming and fabric care.

On the consolidated financial front, total

income from operations rose 8.71 per

cent to `1,609.00 crore in Q4FY19 from

`1,480.09 crore in Q4FY18. EBITDA

showcased a growth of 12.18 per cent to

`283.00 crore in Q4FY19 from

`252.27 crore in Q4FY18. EBITDA

margin increased to 17.59 per cent in

FY19 from 17.04 per cent in FY18. Net

profit demonstrated tremendous

improvement as it surged 122.39 per cent

to `406.00 crore in FY19 from `182.

crore in FY18. Net profit margin rose to

25.23 per cent in FY19 from 12.33 per

cent in FY18. EPS climbed 122.14 per

cent to `3.11 in FY19 from `1.40 in

FY18.

On the consolidated financial front, total

income from operations rose 16 per cent

Total Income 1609.00 1860.97 1836.82 2026.79 1480.

Other Income 28.00 21.57 29.21 24.01 22.

Operating Profit 311.00 370.51 323.27 378.91 275.

Interest 8.00 4.79 5.67 5.29 5.

Net Profit 406.00 251.70 217.59 259.87 182.

Equity 129.00 129.09 129.09 129.09 129.

Last Five Quarters (`/Cr)

Mar-19 Dec-18 Sep-18 Jun-18 Mar-

-15.

-10.

-5.

0.

5.

10.

15.

Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19Feb-19Mar-19Apr-19May-19Jun-19Jul-

Monthly Stock Market Returns

The company is exhibiting strong growth

momentum across major categories in

the domestic business. Its demand

outlook is much more optimistic than its

peers. Marico gets its international

business from relatively stable economies

such as Vietnam and Bangladesh. During

the year, the international business grew

9 per cent in constant currency terms,

while Bangladesh, Vietnam and MENA

delivered double digit constant currency

growth. The company intends to sustain

the double digit volume growth through

premiumisation and new product

launches.

The cost pressures in the domestic

business are easing and the company is

gaining market share. It is focused on

driving conversion of unbranded

products to branded products. Copra

costs declined nearly 24 per cent YoY in

the initial months of FY20. This is a very

positive sign as copra costs account for

40 to 50 per cent of the company’s raw

material costs. Despite the subdued

macroeconomic environment in India in

FY19, we can expect recovery in FY

due to pick-up in investment activity,

rising consumption and an expansionary

monetary policy.

The management has stated that new

products are expected to double as a

percentage of sales over the next couple

of years. Since most of these new

launches are urban-centric and

premium-centric, they will drive gross

margins. Although Marico is incurring

substantial expenses as it is investing in

brand building, lower input costs will

translate into improved profit numbers.

By virtue of these factors, we urge our

reader-investors to BUY this stock.

to `7,334.00 crore in FY19 from

`6,322.18 crore in FY18. EBITDA grew

12.59 per cent to `1,281.00 crore in FY

from `1,137.76 crore in FY18. EBITDA

margin stood at 17.47 per cent in FY19 as

against 18 per cent in FY18. Net profit

climbed 37.27 per cent to `1,136.00 crore

in FY19 from `827.57 crore in FY18. Net

profit margin increased to 15.49 per cent

in FY19 from 13.09 per cent in FY18.

EPS soared 37.18 per cent to `8.67 in

FY19 from `6.32 in FY18. DS

Recommendations Equity

HERE IS WHY

Sturdy growth momentum across segments

Better performance than peers

Healthy product portfolio

Shareholding Pattern

as of Mar. 2019

Promoters 59.

Public 40.

Others 0.

Total 100

Balkrishna Ind. 1079.8 1317.85 22.05 417.

Tata Metaliks 667.8 826.2 37.93 89.

Colgate-Palmolive (I) 1051.65 1231 17.5 77.

PFC 122.6 147.6 20.39 64.

Symphony 1429.8 1672 16.94 64.

Name of

Company

Absolute

Gains

(%)

Best of LAST ONE Year

Exit/CMP

Price (`)

Reco

Price

(`)

Annual

Returns

(%)

BSE Code: 531642

CMP: `368.15 FV: ` 1

BSE Volume: 531642

Date: 16 /07/

GIVE YOUR INVESTMENT BASKET A MAKEOVER

Marico Ltd.

Note: The stocks recommended under this section are fundamentally strong stocks. However investors are advised to wait for the correct opportunity
to enter these stocks considering the market sentiment right now.