Mumbai, India – Shares of Marico Ltd., a leading Fast-Moving Consumer Goods (FMCG) company, jumped 8% on Tuesday following the announcement of strong financial results for the September quarter (Q2 FY27). The positive earnings report, coupled with an upward revision in the company’s full-year guidance, led several prominent brokerage houses to update their outlook and target prices for the stock.
Strong Q2 FY27 Performance Drives Stock Rally
Marico reported a consolidated revenue growth of 13% year-on-year for Q2 FY27. The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) saw an impressive 27% increase, reaching Rs 709 crore. Adjusted profit after tax (PAT) rose significantly by 31% to Rs 550 crore, showcasing strong profitability.
The company's EBITDA margin expanded by 196 basis points year-on-year, settling at 18.2%. This margin improvement was primarily attributed to lower copra prices and a favorable product mix during the quarter. The stock touched an intra-day high of Rs 851, an 8% increase from its previous close of Rs 797.90, before closing slightly higher at Rs 865, up 8.40%.
Key Business Segment Highlights:
- Domestic Business: Volume grew 10% year-on-year.
- Parachute: Experienced its strongest volume growth in 22 quarters, up 13%.
- Value-Added Hair Oils: Recorded 21% volume growth.
- Saffola Edible Oil: Volumes declined in high single digits due to selective supply rationalization.
- International Business: Revenue grew 13% in constant currency terms, fueled by 22% growth in Vietnam and 15% growth in the Middle East, North Africa, and South Africa markets.
Marico Raises FY27 Guidance and Long-Term Targets
Buoyed by the strong quarterly performance, Marico's management raised its FY27 EBITDA growth guidance to the mid-twenties, up from an earlier projection of around 20%. Consolidated revenue is now expected to grow in the mid-teens, with India business volume growth projected to be in double digits. The company also anticipates crossing Rs 15,000 crore in revenue in FY27.
Furthermore, Marico revised its longer-term revenue target of Rs 20,000 crore, initially set for FY30, to be achieved earlier by FY29, reflecting increased confidence in its growth trajectory.
Brokerages React with Revised Estimates
Following the robust results and updated guidance, brokerages largely maintained a positive outlook, though their valuations varied:
- Jefferies: Maintained a 'Buy' rating and raised its target price to Rs 1,035, implying an upside of approximately 29%. It highlighted strong volume and EBITDA growth, along with improved FY27 guidance.
- Morgan Stanley: Retained an 'Overweight' rating with a target price of Rs 954, suggesting around 19% upside. The firm cited strong quarterly performance and higher guidance as strengthening its investment view.
- Macquarie: Maintained an 'Outperform' rating and set a target price of Rs 965, pointing to improved growth visibility and margin expansion.
- CLSA: Upgraded Marico to 'Hold' from 'Underperform', while raising its target price to Rs 737 from Rs 703. CLSA noted the improved FY27 EBITDA growth guidance, supported by procurement benefits, Project SETU, and better profitability across growth businesses.
Investors are advised to consult with a qualified financial advisor before making any investment decisions.