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Marico, 6th February, 2013

Marico, 6th February, 2013

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Published by Angel Broking
6th February, 2013
6th February, 2013

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Categories:Business/Law
Published by: Angel Broking on Feb 06, 2013
Copyright:Attribution Non-commercial

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Please refer to important disclosures at the end of this report
 1 
Quarterly Result (Consolidated)
(
`
cr) 3QFY13 3QFY12
% yoy
2QFY13
% qoq
Revenue1,164 1,058
10.0 1,156 0.7
EBITDA 162 122
33.1
148
9.7OPM (%)13.9 11.5
241bp
12.8
114bp
Adjusted PAT102 84 21.6 86 19.1
 Source: Company, Angel Research
For 3QFY2013, Marico posted a 10% yoy growth in its consolidated net sales to
 ` 
1,164cr, aided by a 9% volume growth. The OPM rose by 241bp on a yoy basisto 13.9% aided by a 353bp yoy expansion in gross margins. The net profit roseby 21.6% yoy to
 ` 
102cr, aided by superior operating performance.
 Key highlights during the quarter:
The
 
domestic consumer business posted valueand volume growth of 16% yoy and 15% yoy respectively. The organic domesticconsumer business’ volume growth was 9%. The international business posted aflat performance on the top-line front due to challenging business environment insome of the countries in which the company has operations. On a constantcurrency basis the company posted a de-growth of 3% yoy on the top-line frontdue to de-growth in Middle East and strikes in Bangaladesh. The OPM rose by 241bp on a yoy basis to 13.9% aided by 353bp yoy expansion in gross marginsdue to lower copra prices. Average copra prices in 3QFY2013 were about23% lower on a yoy basis. The company’s advertising expenses (as a % of sales)went up by 90bp on a yoy basis, which offset the decline in copra prices tosome extent.
Outlook and valuation:
Going ahead, we expect Marico to post a healthy growthin the domestic business aided by its strong brands. The recent acquisitions madeby the company too are expected to fuel growth in the future. At the currentmarket price, the stock is trading at 28.1x FY2014E EPS. We believe the stock isfairly priced and hence,
recommend a Neutral rating on the stock.
 
Key financials (Consolidated)
Y/E March (
`
cr) FY2011 FY2012 FY2013E FY2014ENet Sales 3,135 4,008 4,747 5,402
% chg 17.8 27.9 18.4 13.8
Net Profit (Adj) 238 319 409 504
% chg (1.6) 34.4 28.1 23.4
EBITDA (%) 13.3 12.1 13.6 13.6
EPS (
`
) 3.9 5.2 6.3 7.8
P/E (x) 56.9 42.3 34.6 28.1P/BV (x) 14.7 11.8 7.1 5.8RoE (%) 36.5 30.8 26.0 22.6RoCE (%) 24.9 23.0 23.2 21.4EV/Sales (x) 4.7 3.7 3.1 2.7EV/EBITDA (x) 35.2 30.5 22.7 19.5
 Source: Company, Angel Research
 
NEUTRAL
CMP
 ` 
220Target Price
-
 
Investment Period -
Stock InfoSectorNet Debt (
 ` 
cr)429Bloomberg CodeMRCO@INShareholding Pattern (%)Promoters59.7MF / Banks / Indian Fls2.3FII / NRIs / OCBs31.3Indian Public / Others6.7 Abs. (%)3m1yr3yrSensex4.811.724.5MRCO4.235.0122.1FMCGMarket Cap (
 ` 
cr)14,161Beta0.552 Week High / Low250/155 Avg. Daily Volume33,921Face Value (
 ` 
)1BSE Sensex19,660Nifty5,957Reuters CodeMRCO.BO
 V Srinivasan
022-39357800 Ext: 6831v.srinivasan@angelbroking.com
Marico
Performance Highlights
Marico | 3QFY2013 Result Update
February 5, 2013
 
 Marico | 3QFY2013 Result UpdateFebruary 5, 2013 2
Exhibit 1:
 
Quarterly Performance (Consolidated)
Y/E March (
`
cr) 3QFY133QFY12
% chg
2QFY12
% chg
9MFY20139MFY2012
% chg
Net Sales 1,1641,058
10.0
1,156
0.7
3,5873,059
17.3
Consumption of RM 559545
 2.5
561
(0.3)
1,7611,678
 4.9(% of Sales) 48.051.548.5  49.154.9
Staff Costs 9081
11.9
97
(6.6)
282224
 26.0(% of Sales) 7.87.68.4 7.97.3
 Advertising 158134
17.8
159
(0.5)
472313
51.0(% of Sales) 13.612.713.7 13.210.2
Other Expenses 195176
10.7
192
1.4
578479
 20.7(% of Sales) 16.816.716.6 16.115.7
Total Expenditure 1,002936
7.0
1,008
(0.6)
3,0932,694
14.8
Operating Profit 162122
33.1
148
9.7
494365
35.4
OPM 13.911.512.8 13.811.9
Interest 158
77.9
15
0.6
4631
 48.6
Depreciation & Amortisation 2019
3.5
22
(13.2)
6153
14.6
Other Income 139
37.6
8
69.4
3832
17.1
PBT (excl. Extr Items) 141104
35.3
118
19.0
425313
35.7
Extr Income/(Expense) ---
 
--
PBT (incl. Extr Items) 141104
35.3
118
19.0
425313
35.7
(% of Sales) 12.19.810.2 11.810.2
Provision for Taxation 3618
102.3
29
 22.9
10659
77.9(% of PBT) 25.617.124.8  24.919.0
Minority Interest 223
 
75
Reported PAT 10284
21.6
86
19.1
312248
25.6
PATM 987 98
Equity shares (cr) 646164
 
6461
Reported EPS (
`
) 1.61.4
16.0
1.3
19.1
4.84.0
19.8
Adjusted PAT 10284
21.6
86
19.1
312248
25.6
 
 Source: Company, Angel Research
Exhibit 2:
 
 Actual vs Angel estimates
(
`
cr) Actual Angel Est
% yoy
Revenue 1,1641,283
(9.2)
EBITDA 162192
(15.5)OPM (%) 13.915.0(103)
PAT 102130
(21.1)
 
 Source: Company, Angel Research
 
 Marico | 3QFY2013 Result UpdateFebruary 5, 2013 3
Exhibit 3:
 
Segmental performance (Consolidated)
Y/E Mar (
`
cr) 3QFY20133QFY2012
% chg
2QFY2013
% chg
Total revenue 1,168 1,052
11.0
1,159
0.8
a) Consumer Products 1,089 977
11.4
1,067
 2.1
1) Domestic 828 719
15.2
792
 4.6
2) International 261 259
1
275
(5)
b) Skin Care 79 75
5
92
(14)
Total PBIT 172 125
37.8
152
13.0
a) Consumer Products 168 140
 20.3
147
14.7
1) Domestic 145 116
 24.7
125
16.1
2) International 23 24
(1.1)
22
7.1
b) Skin Care 4 (15)6
PBIT Margin (%) 14.8 11.9 13.2
a) Consumer Products 15.5 14.3 13.71) Domestic 17.5 16.2 15.82) International 9.0 9.2 8.0b) Skin Care 5.0 (19.9)6.2
 
 Source: Company, Angel Research
Double-digit top-line growth continues
For 3QFY2013, Marico posted a 10.0% yoy growth in its consolidated net sales to
 ` 
1,164cr. Volume growth for the company stood at 9%.The Indian consumer products business posted a growth of 16% yoy, with volumegrowth coming at 15%. Organic volume growth (adjusted for the acquiredpersonal care business of Paras, consisting of brands such as
 Set Wet, Zatak andLivon)
stood at 9% yoy. The company continues to maintain its leadership in thecoconut oil (
Parachute and Nihar
), premium refined oil (
 Saffola
) and hair oil
(Parachute Advanced and Nihar)
categories.
The international business posted a flat performance on the top-line front dueto challenging business environment in some of the countries in which thecompany has operations. On a constant currency basis the company posted ade-growth of 3% yoy on the top-line front due to de-growth in the Middle Eastand strikes in Bangaladesh. However, the company’s Egypt business grew by 26% yoy. The South Africa and South East Asia businesses too posted growthsof 7% and 14% respectively.
 During the quarter, Kaya reported a turnover of
 ` 
79cr. Same-store sales in Indiaand Middle East grew by 4% yoy. Kaya reported an EBIT of
 ` 
4cr for the quarter.

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