On Tuesday, Phillip Securities began coverage on Marico Ltd (NS:MRCO:IN) shares, issuing a Buy rating and setting a price target of INR 780.00. The firm highlighted Marico's solid position due to the performance of its core products and potential for growth.
The analyst noted that Marico's primary offerings, such as Parachute coconut hair oil, have returned to a growth trajectory, supported by a gradually inflationary copra cycle. Moreover, Saffola, Marico's brand of edible oils, is anticipated to experience pricing-led growth in the upcoming quarters.
The report also pointed out that while Marico's Value Added Hair Oils (VAHO) segment has yet to fully recover, the foundation for growth is in place. Marico's strategic focus on diversifying into healthy foods and premium personal care, which currently makes up about 20% of its portfolio, has not only reduced its vulnerability to commodity cycle swings but has also revealed a consistent double-digit growth opportunity.
Marico's strategic advantage in organized trade, where it conducts approximately 30% of its sales, was also underlined. The company is broadening its direct reach to stimulate further growth. Moreover, Marico's international business segment has been consistently achieving double-digit growth rates, contributing to the positive outlook.
Despite Marico's stock price experiencing an approximate 11% decline from its recent high, Phillip Securities suggests that the company's robust earnings visibility may lead to a re-rating opportunity. The coverage initiation and the optimistic view of the company's growth prospects and diversified product base underline the potential for Marico's stock performance in the market.
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