Marico Continues Surging Amid Sour Market on Sept 8 and 9 – What Is the Company’s Potential? An In-depth Fundamental Analysis And Future Prediction of This Steady Large-cap

In a market facing turbulent conditions on September 8 and 9, 2024, Marico Limited continues to shine, demonstrating its resilience and strong fundamentals. The stock, currently trading at ₹676 with a PE ratio of 57.6, aligns well with its peers in the consumer goods sector. But what is driving this large-cap company’s steady performance despite market volatility, and what potential does it hold for short- and long-term investors?

Marico Limited is a multinational Indian consumer goods company with a diverse product portfolio ranging from hair care to health foods. Known for iconic brands like Parachute and Saffola, Marico has consistently delivered value, growing steadily both domestically and internationally across 25+ countries. With its head office in Mumbai and eight manufacturing units across India, Marico’s stronghold in the FMCG space continues to expand.

History and Growth

Marico’s journey began in 1988 under the name Marico Foods Limited. It quickly evolved, growing into Marico Industries by 1989 and spreading its wings globally with an office in Dubai by 1992. The company was listed on the Indian stock exchanges by 1996, marking the beginning of its rapid financial growth and diversification.

Throughout the 1990s and early 2000s, Marico ventured into various sectors, from hair oils and edible oils to male grooming and nutraceuticals. Its flagship brand, Parachute, along with others like Set Wet, Livon, and Saffola, have become household names. This aggressive yet steady growth helped Marico build a solid market cap, which exceeded ₹25,000 crore by 2015.

Marico’s Current Position in the Market

As of 2024, Marico stands as a dominant player in the FMCG space. With its turnover surpassing ₹7,315 crores in FY 2019-2020, the company has continually delivered sustainable growth through its widespread product portfolio and operational efficiencies. Even amid challenges posed by COVID-19, Marico proved its mettle, outperforming in difficult times.

The company’s diverse asset and liability distribution, shown in the charts provided, further underscore its healthy financial structure. Fixed assets amount to ₹2,724 crore, with substantial investments and other assets comprising ₹602 crore and ₹3,983 crore, respectively. On the liability side, borrowings amount to ₹528 crore, while other liabilities and reserves show balanced growth.

Financial Performance

The financial performance of Marico over the last few years has been nothing short of impressive, as shown in the detailed analysis above:

Sales Growth

From March 2018 to March 2023, sales steadily increased from ₹6,322 crore to ₹9,653 crore, with an expected jump to ₹10,232 crore by March 2025.

Operating Profit and Net Profit

Both metrics have also consistently risen, with operating profit growing from ₹1,137 crore in March 2018 to ₹2,026 crore in March 2024. The prediction for March 2025 stands at ₹2,223 crore.

EPS

Earnings per share (EPS) has grown from ₹6.31 in 2018 to ₹10.07 in 2023, with a predicted rise to ₹12.13 by 2025, reflecting the company’s ability to deliver increasing value to shareholders.

Operating Profit Margin (OPM)

Marico’s OPM has shown healthy growth from 17.98% in 2018 to 20.99% in 2024, with an expected rise to 21.73% in 2025.

Marico’s Return on Equity (ROE)

A key highlight of Marico’s financial strength is its Return on Equity (ROE), which showcases its ability to generate returns on shareholder investments. Over the years, ROE has remained strong, fluctuating between 32.52% to 40.18%, signaling efficient management and solid profitability.

Asset Distribution

• Other Assets: The majority of Marico’s assets, valued at ₹3,983 crores, fall under “Other Assets,” which could include inventory, accounts receivables, or other financial instruments.
• Fixed Assets: ₹2,724 crores are allocated to fixed assets, such as manufacturing plants, machinery, or property.
• Investments: Marico has ₹602 crores invested in securities, subsidiaries, or ventures for future growth.
• CWIP: Capital Work in Progress stands at ₹44 crores, likely for ongoing infrastructure or plant development projects.

Liability Distribution

• Other Liabilities: ₹2,993 crores are allocated to liabilities like trade payables, deferred taxes, or operational obligations.
• Reserves: ₹3,703 crores in reserves reflect the company’s retained earnings for future growth, reinvestment, or risk mitigation.
• Borrowings: Debt obligations amount to ₹528 crores, reflecting loans or bonds Marico has taken.
• Equity Capital: ₹129 crores signify the company’s issued share capital, representing ownership held by shareholders.

Marico Stock Analysis and Potential

With a current stock price of ₹676 and a PE ratio of 57.6, Marico’s valuation is aligned with its sector peers. Given the company’s strong fundamentals, consistent growth, and stable operational structure, Marico presents a compelling investment case.

Short-term Target (3 months):

• Price Target: ₹720-₹740
• Stop-loss: ₹650

Long-term Target (12+ months):

• Price Target: ₹800-₹820
• Stop-loss: ₹620

Conclusion

Marico Limited continues to be a star performer in the FMCG sector, defying the sour market sentiments on September 8 and 9, 2024. With a robust product portfolio, impressive financial metrics, and an experienced leadership team, the company is well-equipped to deliver sustained growth in the future.

For investors, Marico offers a balance of steady returns and long-term capital appreciation. Whether you are considering short-term gains or long-term investment, Marico’s resilience and market position make it a compelling choice in your portfolio.

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