Marico Share Price Target: Emkay Recommends 'ADD' With Rs 700 On Upside - Here’s Why

Emkay has maintained an 'ADD' rating on Marico, projecting a target price (TP) of Rs700 with a CMP of Rs 661, citing favourable business prospects tempered by margin concerns amidst escalating input costs.

The brokerage's report emphasizes Marico's forward price-to-earnings ratio (P/E) nearing its 5-year average, signalling limited upside potential from current levels.

Why Bullish on this stance?
The report anticipates a 17% consolidated sales growth for Q4FY25, driven by strong performance in Marico's domestic and international segments. Emkay forecasts robust revenue expansion supported by strategic price adjustments across key brands like Parachute and Saffola Edible Oil, coupled with improving domestic volume growth.

Margin Pressures and Operational Performance
Despite the optimistic revenue forecast, Emkay highlights challenges in maintaining margins amid persistent inflationary pressures on raw materials. Marico's Q4FY25 earnings before interest, taxes, depreciation, and amortization (EBITDA) growth is expected to be modest, reflecting a marginal increase year-over-year.

‘We expect the healthy ad spending to sustain, with 22% increase in absolute spend. Overall EBITDA margin is likely to contract by 250bps YoY to 16.9%. Marico is likely to see 19.8% OPM for FY25 vs guidance of 20%. We see domestic business EBITDA margin at ~19%, down by 340bps YoY. EBITDA margin for the international business is expected to be steady at ~27%,’ the report reads.

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Strategic Initiatives and Market Position
Emkay's analysis underscores Marico's proactive approach in navigating market dynamics through targeted pricing strategies and sustained investment in brand promotion. The firm remains optimistic about Marico's ability to achieve double-digit growth in FY26, contingent on favourable volume trends amid a deflationary economic environment.
 

Maintaining a positive stance on Marico, Emkay projects a revenue and earnings compound annual growth rate (CAGR) of approximately 10% over FY25-27E. The brokerage advises investors to 'ADD' Marico shares in anticipation of continued growth momentum and strategic execution despite near-term margin challenges.

 

Disclaimer

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