02 AUG 2019 Quarterly Update

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FMCG Target Price: Rs 420

Rating system revised. Refer last page

Strong quarter; management upbeat
Marico’s Q1FY20 print was stronger than expected on all counts with CMP : Rs 363
superior quality of earnings (robust operational performance/beat Potential Upside : 16%
despite 32% YoY jump in A&P). Domestic business delivered good
performance (ex-Saffola), while IBD also posted a healthy quarter
(on both volume/margin fronts). MARKET DATA
No. of Shares : 1,291 mn
While management alluded to some slowdown in demand conditions, it Free Float : 40%
was optimistic on pick-up in revenue growth momentum in H2FY20 Market Cap : Rs 468 bn
(6-8% volume guidance for FY20) and more upbeat on margin 52-week High / Low : Rs 397 / Rs 286
Avg. Daily vol. (6mth) : 1.9 mn shares
expansion (19%+ margin, even as it maintains strong spends in A&P to
Bloomberg Code : MRCO IB Equity
support strong NPD funnel). We increase our estimates by 3-4% as we
Promoters Holding : 60%
bake in higher margin (RM tailwinds and lower price deflation).
FII / DII : 27% / 6%
We upgrade the stock to BUY from ADD with revised TP of Rs 420 (from
Rs 380) as we roll over to June-21 (target P/E of 40x).

Consolidated results – above expectations operational performance: Q1FY20 print was above our expectations led by
domestic volume delivery at 6% YoY (vs. our estimate of 5%); we highlight the key beats – (1) domestic FMCG growth at
7% YoY was 2% above our estimate led by higher-than-expected price/mix-led growth (lower deflation in Parachute and
VAHO) and higher-than-expected volume growth, (2) within core brands, while Saffola was below expectations (3%
volume growth), other core brands like Parachute (9% volume growth) and VAHO (volume growth of 7% and 11% value
growth despite ~5% price cut on weighted average basis initiated in Q4FY19 in VAHO portfolio) beat expectations and
(3) comparable EBITDA growth was 5% above our estimates on standalone basis and 7% above our estimates on
consolidated basis aided by lower other expense and higher gross margin despite elevated A&P spends.

Consolidated net revenue grew 7% YoY to Rs 21.6 bn (1% above our estimate), comparable EBITDA adjusted for
Ind-AS 116 grew 27% YoY to Rs 4.5 bn (7% above our estimate) and recurring PAT grew 28% YoY to Rs 3.3 bn (8%
above our estimate; aided by lower tax rate – down ~160 bps YoY). Reported PAT increased 20% due to one-time
expense of Rs 190 mn towards VRS scheme offered to employees at Kanjikode (Kerala) plant.
Financial summary (Consolidated) Key drivers (%)
Y/E March FY18 FY19 FY20E FY21E FY19 FY20E FY21E
Sales (Rs mn) 63,222 73,336 79,222 87,891 Dom. CBP rev growth 15.5 7.5 10.2

Adj PAT (Rs mn) 8,145 9,285 11,265 12,825 Int. rev growth 15.5 11.0 12.0
Con. EPS* (Rs) - - 8.7 10.1 Cons Gross margin 45.2 48.4 48.3
EPS (Rs) 6.3 7.2 8.7 9.9 Cons EBITDA margin 17.4 19.4 19.9
Change YOY (%) 2.0 14.1 21.3 13.8

P/E (x) 57.5 50.4 41.5 36.5

Price performance
RoE (%) 33.5 33.5 35.7 36.9 140
Sensex Marico
RoCE (%) 41.1 40.8 44.0 46.4
120
EV/E (x) 40.8 36.1 29.8 26.1

DPS (Rs) 4.2 4.8 5.5 6.3 100

Source: *Consensus broker estimates, Company, Axis Capital 80

Jul-18 Oct-18 Jan-19 Apr-19 Jul-19

Anand Shah Executive Director – Consumer Gaurav Jogani AVP – Consumer

anand.shah@axiscap.in 91 22 4325 1142 gaurav.jogani@axiscap.in 9122 43251124

Axis Capital is available on Bloomberg (AXCP<GO>), Reuters.com, Firstcall.com and Factset.com 01

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

Exhibit 1: Consolidated quarterly results (Rs mn)

Reported Chg (%) Chg (%) Comp. Chg (%) Axis Est Chg (%)
Q1'20 Q1'19 YoY Q4'19 QoQ Q1'20 YoY Q1'20 Axis Est.
Net operating income 21,660 20,268 7 16,090 35 21,660 7 21,360 1
Material cost (11,370) (11,696) (3) (8,200) 39 (11,370) (3) (11,330) 0
Gross Profit 10,290 8,572 20 7,890 30 10,290 20 10,030 3
Employee cost (1,270) (1,147) 11 (1,170) 9 (1,270) 11 (1,285) (1)
Advertising and promotion (2,190) (1,657) 32 (1,530) 43 (2,190) 32 (2,028) 8
Other expenditure (2,220) (2,219) 0 (2,360) (6) (2,340) 5 (2,502) (6)
Total expenditure (17,050) (16,719) 2 (13,260) 29 (17,170) 3 (17,145) 0
EBITDA 4,610 3,549 30 2,830 63 4,490 27 4,215 7
Other income 280 240 17 280 - 280 17 295 (5)
Interest (120) (53) 127 (80) 50 (80) 51 (75) 7
Depreciation (350) (224) 56 (290) 21 (260) 16 (252) 3
Pretax profits 4,420 3,512 26 2,740 61 4,430 26 4,183 6
Tax (1,080) (913) 18 (560) 93 (1,080) 18 (1,105) (2)
Minority Interest (80) (42) - (50) 60 (80) 91 (45) 78
Recurring PAT (after MI) 3,260 2,557 27 2,130 53 3,270 28 3,033 8
Extraordinary items (190) 0 1,880 (190) 0
Net profit (reported) 3,070 2,557 20 4,010 (23) 3,080 20 3,033 2
EPS 2.5 2.0 27 1.7 53 2.5 27 2.4 7
Ratios (% of net operating revenues)
Gross Margin (%) 47.5 42.3 521 bps 49.0 -153 bps 47.5 521 bps 47.0 55 bps
EBITDA margin (%) 21.3 17.5 377 bps 17.6 369 bps 20.7 321 bps 19.7 99 bps
Material cost 52.5 57.7 -522 bps 51.0 152 bps 52.5 -522 bps 53.0 -56 bps
Employee cost 5.9 5.7 20 bps 7.3 -141 bps 5.9 20 bps 6.0 -16 bps
Advertising and promotion 10.1 8.2 193 bps 9.5 60 bps 10.1 193 bps 9.5 61 bps
Other expenditure 10.2 10.9 -70 bps 14.7 -442 bps 10.8 -15 bps 11.7 -92 bps
Income tax rate (% of PBT) 24.4 26.0 -157 bps 20.4 399 bps 24.4 -163 bps 26.4 -204 bps
Source: Company, Axis Capital

Exhibit 2: Domestic volume growth

20
(%)
15 12.4
10.5 10.0 9.4
10 8.4 8.0 8.0 8.0
6.0 5.5 6.0 6.0
5.0
5 3.4
1.0
0

(5)
(4.0)

(10) (9.0)
Q1FY16

Q2FY16

Q3FY16

Q1FY17

Q2FY17

Q3FY17

Q1FY18

Q2FY18

Q1FY19

Q2FY19

Q4FY19

Q1FY20
Q4FY16

Q4FY17

Q3FY18

Q4FY18

Q3FY19

Source: Company, Axis Capital

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 02

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

Exhibit 3: Standalone quarterly results (Rs mn)

Reported Chg (%) Chg (%) Comp. Chg (%) Axis Est Chg (%)
Q1'20 Q1'19 YoY Q4'19 QoQ Q1'20 YoY Q1'20E Axis Est.
Net operating income 17,770 16,846 5 12,900 38 17,770 5 17,492 2
Material cost (9,970) (10,248) (3) (7,040) 42 (9,970) (3) (9,899) 1
Gross Profit 7,800 6,599 18 5,860 33 7,800 18 7,593 3
Employee cost (860) (773) 11 (750) 15 (860) 11 (850) 1
Advertising and promotion (1,630) (1,266) 29 (1,050) 55 (1,630) 29 (1,520) 7
Other expenditure (1,820) (1,810) 1 (1,870) (3) (1,900) 5 (1,991) (5)
Total expenditure (14,280) (14,096) 1 (10,710) 33 (14,360) 2 (14,259) 1
EBITDA 3,490 2,750 27 2,190 59 3,410 24 3,233 5
Other income 260 230 13 970 (73) 260 13 270 (4)
Interest (80) (24) 231 (50) 60 (50) 107 (45) 11
Depreciation (290) (190) 53 (250) 16 (230) 21 (210) 10
Pretax profits 3,380 2,766 22 2,860 18 3,390 23 3,248 4
Tax (680) (617) 10 (440) 55 (680) 10 (731) (7)
PAT 2,700 2,149 26 2,420 12 2,710 26 2,517 8
Extraordinary items (190) 0 1,880 (190) 0 #DIV/0!
Net profit (reported) 2,510 2,149 17 4,300 (42) 2,520 17 2,517 0
EPS 2.1 1.7 26 1.9 12 2.1 26 2.0 7
Costs as a % of sales
Gross Margin (%) 43.9 39.2 472 bps 45.4 -154 bps 43.9 472 bps 43.4 48 bps
OPM (%) 19.6 16.3 331 bps 17.0 266 bps 19.2 286 bps 18.5 70 bps
Material cost 56.1 60.8 -473 bps 54.6 153 bps 56.1 -473 bps 56.6 -49 bps
Employee cost 4.8 4.6 25 bps 5.8 -98 bps 4.8 25 bps 4.9 -2 bps
Advertising and promotion 9.2 7.5 165 bps 8.1 103 bps 9.2 165 bps 8.7 48 bps
Other expenditure 10.2 10.7 -51 bps 14.5 -426 bps 10.7 -6 bps 11.4 -69 bps
Income tax rate (%) 20.1 22.3 -219 bps 15.4 473 bps 20.1 -225 bps 22.5 -245 bps
Source: Company, Axis Capital

India business update

♦ Parachute CNO rigid sales grew 8% YoY led by 9% volume growth (above our
estimate of 5% volume growth, even on a high base of 9% for Q1FY19) and
1% price/mix-led deflation, however low-margin non-focused brands of CNO
portfolio declined in double digits in a correcting copra price environment.
Management highlighted that it gained more than 240 bps volume market
share during the quarter. Overall volume market share of CNO rose to 60%
(March 2019 MAT). Management remains confident of sustaining the
medium-term guidance of 5-7% volume growth based on run-rate for past few
quarters led by tactical interventions initiated to maintain the value proposition.
On Copra, it highlighted that it expects ~18-20% deflation in Copra prices
from FY19 levels, however, there could be some price reversal from October
onwards and it could gain in such a scenario given its quality sourcing
capabilities and ability to procure quantities vs. the unorganized segment.
Domestic volume growth would have been higher by ~1.5% excluding the
decline in low-priced CNO portfolio.
♦ VAHO posted some recovery in volume growth to 7% (post declining to 1% in
Q4FY19) and 11% value growth (despite an ~5% weighted average price cut
in Q4FY19); management attributed the sluggishness in VAHO to
underperformance in the premium portfolio owing to slowdown in overall
consumption. However, market gains sustained and it witnessed gains of
148 bps volume market share and 120 bps value market keeping it positive on
the underlying strength of the franchise. On a MAT basis, the company
consolidated its market leadership with volume share at ~34% and value share
at ~27%.

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 03

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

Nihar Shanti Amla Badam retained its no.1 position in volumes in the value
added hair oil category and gained 176 bps in volume market share. Nihar
Naturals Sarson Kesh Tel garnered volume market share of 13% in the
perfumed mustard oil. Parachute Advansed Aloe Vera Enriched Coconut Hair
Oil now scaled up to a pan-India level. The brand has garnered sizeable
market share in its key market and Marico looks to invest aggressively behind
the brand. Hair & Care was re-launched in its classical pack and fragrance in
prototype markets and subsequently extended across the country.

♦ Saffola franchise posted a weak quarter with 3% volume growth (6% value
growth, significantly below our estimates); growth was impacted due to
sluggishness in the urban general trade channel, while modern trade and e
commerce channel continued to post strong growth. Management also
highlighted that interplay between different channels was impacting the growth;
hence, it introduced a special price pack for general trade to remove this
disparity. However, the move so far hasn’t yielded any result and has led to
lower volume growth YoY due to lower promotional volumes. Management
continues to monitor the situation and continues to re-work is strategy to
revive Saffola.
♦ The healthy foods franchise posted 38% value growth for the quarter (Oats
business grew by 20%) aided by several new launches under the ‘Saffola
FITTIFY Gourmet’ range and Coco Soul. Both these brands have gained positive
consumer traction. During the quarter, the company also prototyped Saffola
Perfect Nashta comprising a range of 3-minute ready-to-cook mixes of
traditional Indian breakfasts such as idli, dosa, upma (semolina) and poha (rice
flakes). The range is being test marketed in modern trade and select general
trade channels in Delhi. Management is targeting overall revenue of Rs 4-5 bn
from the foods portfolio in the next 4-5 years.

♦ Premium hair nourishment grew 28% YoY in Q1FY20 (up 55% for FY19). Livon
Serums continue to sustain strong growth led by growth in sachets, MT and
e-commerce and higher contribution from new variants (Livon Serums for Dry
and Unruly Hair, Livon Serum Colour Protect and Livon Shake and Spray
Serum). The initial reception for True Roots Botanical Hair Tonic has not met
company’s expectations, but the company will continue to invest towards brand
visibility and focus GTM to drive growth in select markets.

♦ Male grooming segment continues to witness weak performance and had a flat
quarter post 3% growth in Q4FY19 led by weak performance in deodorants
excluding which the franchise grew in double digits. The company called out
that it doesn’t expect any medium term concerns for the male grooming
franchise given healthy traction in hair gels, hair waxes and the Set Wet Studio
X range.

♦ Kaya Youth O2 range launched in premium skin care category: In Q4, Marico
launched the Kaya Youth O2 range in the premium skincare space. The range
includes day cream, face wash, face wipes and micellar water. Brand has been
launched in general trade in Mumbai, modern trade in the top 8 metros and e-
commerce across India. A beauty advisor program has been rolled out in
around 70 stores, which has helped the brand gain visibility.
♦ On overall demand environment, management did indicate of sluggishness in
demand especially led by tight liquidity situation in the wholesale trade.
However, it remains confident of delivering on its 6-8% volume growth in FY20
Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 04

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

led by strong NPD funnel and aggressive participation in bottom-of-pyramid in

VAHO. The company highlighted that it is looking for dramatic transformation
of urban GT and is looking through building rural distribution which would be a
moat in the long term.
♦ Rural GT grew 4% and continued to outpace urban GT growth which declined
5%. MT sales grew 30% YoY. E-commerce almost doubled, although on a
low base.

♦ Amid key raw materials, Copra was down 25% YoY (down 13% QoQ), rice
bran oil was down 12%, while LLP and HDPE declined 1% and 21%
respectively; management does expect some rebound in Copra prices from
October which is generally the off-season for Copra harvesting.

Exhibit 4: Parachute rigid pack volume growth

20
(%) 15.0 15.0
15 12.0
11.0
9.0 9.0 9.0
10 8.0
7.0
8.0
6.0 6.0
4.0
5
0
(1.0)
(5)
(5.0)
(6.0)
(10)
(9.0)
(15)
Q1FY16

Q2FY16

Q4FY16

Q1FY17

Q2FY17

Q3FY17

Q1FY18

Q2FY18

Q3FY18

Q4FY18

Q2FY19

Q3FY19

Q4FY19

Q1FY20
Q3FY16

Q4FY17

Q1FY19

Source: Company, Axis Capital

Exhibit 5: VAHO volume growth

25 (%) 21.0
20
14.0 15.0
15 11.0 11.0 12.0 11.0
9.0 10.0
10 8.0 8.0 7.0 7.0
5.0
5 1.0
0
(5)
(10) (8.0)
(15) (12.0)
Q1FY16

Q2FY16

Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q4FY19

Q1FY20
Q3FY16

Q4FY16

Q1FY18

Q2FY18

Q3FY19

Source: Company, Axis Capital

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 05

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

Exhibit 6: Saffola volume growth

20 (%) 17.0
18.0

16 13.0
11.0
12 10.0
8.0
8 6.0 6.0
5.0
4.0 4.0
3.0 3.0
4 2.0
0.0
0
(4) (1.0)

(8)
(9.0)
(12)
Q2FY16

Q3FY16

Q4FY16

Q2FY17

Q3FY17

Q2FY18

Q3FY18

Q1FY19

Q2FY19

Q3FY19

Q1FY20
Q1FY16

Q1FY17

Q4FY17

Q1FY18

Q4FY18

Q4FY19
Source: Company, Axis Capital

International business update

♦ Revenue grew 9% YoY to Rs 4.35 bn (cc growth at 7%) with volume growth at
~6% (~8% in Q4FY19); adjusting for one-time trade inventory correction in
Gulf business cc growth would have been 9%. Operating margin (before
corporate allocation) stood at 27% YoY, up 490 bps YoY. The operating
margin improvement was largely led by gross margin improvement and
partially negated increase in A&P spends. Company expects to maintain
international margin at 18%-20% (up from 16-17% guidance earlier) and
plough back savings to drive growth.
♦ Bangladesh (46% of international sales) cc growth was 11%. Parachute
coconut oil grew by 5% in cc terms (maintained market leadership at 84%
volume market share, down by ~200 bps QoQ). Non-coconut oil (revenue
contribution at 30% for FY19) portfolio grew strong 29% in cc in Q1 (33% in
FY19). Management is confident of delivering double-digit cc growth in this
geography in the medium term. With the strong growth witnessed in the
non-coconut portfolio and recent initiatives of new product launches,
management is confident that its contribution will exceed 35% over next
two years.

♦ South East Asia (26% of international sales), mainly Vietnam and Myanmar,
grew by 8% YoY growth in cc terms (4% YoY in Q4FY19). Vietnam posted
11% cc growth in Q1 (10% in FY19) led by healthy growth in both male
shampoos and deodorants. Foods business also rebounded post a sluggish
FY19. Management expects steady (earlier double digit) cc growth in the
medium term from this geography.

♦ MENA (15% of international sales) declined in double digits in Q1FY20 in cc

terms mainly due to one-time inventory correction in the Middle East business;
adjusting for it, MENA business grew by 2% in cc terms. Egypt had a flat
quarter. However, management has highlighted challenging macros in these
geographies and remains cautiously optimistic about the medium term outlook
in these markets.

♦ South Africa (8% of international sales) saw a muted quarter (including Isoplus),
with only 6% cc growth in Q1.

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 06

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

Exhibit 7: 1-Yr forward P/E band Exhibit 8: 1-Yr forward EV/EBITDA band
fwd PE (x) Mean fwd EV-E (x) Mean
50 +1 SD -1 SD 36 +1 SD -1 SD
(x) (x)

45 32

40 28

35 24

30 20

Jul-16

Jul-17

Jul-18

Jul-19
Oct-16

Oct-17

Oct-18
Jan-17

Jan-18

Jan-19
Apr-18
Apr-16

Apr-17

Apr-19
Jul-16

Jul-17

Jul-18

Jul-19
Oct-16

Oct-17

Oct-18
Jan-17

Jan-18

Jan-19
Apr-16

Apr-17

Apr-18

Apr-19

Source: Bloomberg, Axis Capital Source: Bloomberg, Axis Capital

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 07

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 02 AUG 2019 Quarterly Update
MARICO
FMCG
Financial summary (Consolidated)
Profit & loss (Rs mn) Cash flow (Rs mn)
Y/E March FY18 FY19 FY20E FY21E Y/E March FY18 FY19 FY20E FY21E
Net sales 63,222 73,336 79,222 87,891 Profit before tax 11,171 12,619 15,306 17,653
Other operating income - - - - Depreciation & Amortisation 891 964 1,110 1,240
Total operating income 63,222 73,336 79,222 87,891 Chg in working capital (3,065) 210 120 (287)
Cost of goods sold (33,482) (40,177) (40,907) (45,434) Cash flow from operations 5,545 10,180 11,680 12,597
Gross profit 29,740 33,159 38,315 42,457 Capital expenditure (1,271) (1,620) (1,188) (1,292)
Gross margin (%) 47.0 45.2 48.4 48.3 Cash flow from investing 169 (3,510) 127 379
Total operating expenses (18,362) (20,366) (22,927) (24,984) Equity raised/ (repaid) - - - -
EBITDA 11,378 12,793 15,387 17,474 Debt raised/ (repaid) 692 397 (240) (500)
EBITDA margin (%) 18.0 17.4 19.4 19.9 Dividend paid (6,357) (6,820) (8,223) (9,345)
Depreciation (891) (964) (1,110) (1,240) Cash flow from financing (5,675) (6,530) (8,750) (10,097)
EBIT 10,487 11,829 14,278 16,234 Net chg in cash 39 140 3,057 2,880
Net interest (162) (238) (286) (252)
Other income 846 1,028 1,315 1,671 Key ratios
Profit before tax 11,171 12,619 15,306 17,653 Y/E March FY18 FY19 FY20E FY21E
Total taxation (2,896) (3,164) (3,827) (4,590) OPERATIONAL
Tax rate (%) 25.9 25.1 25.0 26.0 FDEPS (Rs) 6.3 7.2 8.7 9.9
Profit after tax 8,276 9,455 11,480 13,063 CEPS (Rs) 7.0 7.9 9.6 10.9
Minorities (131) (170) (215) (239) DPS (Rs) 4.2 4.8 5.5 6.3
Profit/ Loss associate co(s) - - - - Dividend payout ratio (%) 67.4 66.0 63.0 62.9
Adjusted net profit 8,145 9,285 11,265 12,825 GROWTH
Adj. PAT margin (%) 12.9 12.7 14.2 14.6 Net sales (%) 6.8 16.0 8.0 10.9
Net non-recurring items - - - - EBITDA (%) (1.9) 12.4 20.3 13.6
Reported net profit 8,145 9,285 11,265 12,825 Adj net profit (%) 2.0 14.0 21.3 13.8
FDEPS (%) 2.0 14.1 21.3 13.8
Balance sheet (Rs mn) PERFORMANCE
Y/E March FY18 FY19 FY20E FY21E RoE (%) 33.5 33.5 35.7 36.9
Paid-up capital 1,291 1,290 1,290 1,290 RoCE (%) 41.1 40.8 44.0 46.4
Reserves & surplus 24,138 28,700 31,741 35,221 EFFICIENCY
Net worth 25,429 29,990 33,031 36,511 Asset turnover (x) 3.2 3.2 3.3 3.6
Borrowing 3,093 3,490 3,250 2,750 Sales/ total assets (x) 1.6 1.7 1.6 1.6
Other non-current liabilities 394 320 336 360 Working capital/ sales (x) 0.1 0.1 0.1 0.1
Total liabilities 29,041 33,910 36,942 40,184 Receivable days 19.7 25.7 22.0 21.0
Gross fixed assets 13,582 14,720 15,908 17,200 Inventory days 106.4 85.1 86.9 84.9
Less: Depreciation (2,478) (3,250) (4,360) (5,600) Payable days 57.8 56.9 58.6 59.3
Net fixed assets 11,103 11,470 11,549 11,601 FINANCIAL STABILITY
Add: Capital WIP 268 450 450 450 Total debt/ equity (x) 0.1 0.1 0.1 0.1
Total fixed assets 11,372 11,920 11,999 12,051 Net debt/ equity (x) (0.2) (0.2) (0.3) (0.4)
Total Investment 5,428 4,500 4,500 4,500 Current ratio (x) 2.0 2.2 2.3 2.3
Inventory 15,109 14,110 15,193 16,374 Interest cover (x) 64.9 49.8 49.8 64.4
Debtors 3,406 5,170 4,775 5,057 VALUATION
Cash & bank 2,001 5,520 8,577 11,457 PE (x) 57.5 50.4 41.5 36.5
Loans & advances 700 790 853 947 EV/ EBITDA (x) 40.8 36.1 29.8 26.1
Current liabilities 11,682 13,510 14,649 16,312 EV/ Net sales (x) 7.3 6.3 5.8 5.2
Net current assets 12,241 15,610 18,564 21,754 PB (x) 18.4 15.6 14.2 12.8
Other non-current assets - 1,880 1,880 1,880 Dividend yield (%) 1.2 1.3 1.5 1.7
Total assets 29,041 33,910 36,942 40,184 Free cash flow yield (%) 0.9 1.8 2.2 2.4
Source: Company, Axis Capital Source: Company, Axis Capital

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 08

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

Axis Capital Limited is registered with the Securities & Exchange Board of India (SEBI) as “Research Analyst” with SEBI-registration
number INH000002434 and which registration is valid till it is suspended or cancelled by the SEBI.

DISCLAIMERS / DISCLOSURES
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

1. Axis Capital Limited (ACL), the Research Entity (RE) as defined in the Regulations, is engaged in the business of Investment banking, Stock broking and
Distribution of Mutual Fund products.

2. ACL is registered with the Securities & Exchange Board of India (SEBI) for its investment banking and stockbroking business activities and with the
Association of Mutual Funds of India (AMFI) for distribution of financial products.

3. ACL has no material adverse disciplinary history as on the date of publication of this report

4. ACL and / or its affiliates do and seek to do business including investment banking with companies covered in its research re ports. As a result, the
recipients of this report should be aware that ACL may have a conflict of interest that may affect the objectivity of this report. Investors should not
consider this report as the only factor in making their investment decision.

5. The research analyst or any of his / her family members or relatives may have financial interest or any other material conflict of interest in the subject
company of this research report.

6. The research analyst has not served as director / officer, etc. in the subject company in the last 12-month period ending on the last day of the month
immediately preceding the date of publication of this research report.

7. The RE and / or the research analyst or any of his / her family members or relatives may have actual / beneficial ownership exceeding 1% or more,
of the securities of the subject company as at the end of the month immediately preceding the date of publication of this research report.

8. In the last 12-month period ending on the last day of the month immediately preceding the date of publication of this research report ACL or any of its
associates may have:
i. Received compensation for investment banking, merchant banking or stock broking services or for any other services from the subject company
of this research report and / or;
ii. Managed or co-managed public offering of the securities from the subject company of this research report and / or;
iii. Received compensation for products or services other than investment banking, merchant banking or stockbroking services from the subject
company of this research report.

9. The other disclosures / terms and conditions on which this research report is being published are as under:
i. This document is prepared for the sole use of the clients or prospective clients of ACL who are / proposed to be registered in India. It may be
also be accessed through financial websites by those persons who are usually enabled to access such websites. It is not for sale or distribution
to the general public.
ii. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.
iii. Nothing in this document should be construed as investment or financial advice, or advice to buy / sell or solicitation to buy / sell the securities
of companies referred to therein.
iv. The intent of this document is not to be recommendatory in nature
v. The investment discussed or views expressed may not be suitable for all investors. Each recipient of this document should make such
investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the suitability, merits and risks of such an
investment.
vi. ACL has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied,
is made as to the accuracy, completeness or fairness of the information and opinions contained in this document
vii. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this
statement as may be required from time to time without any prior approval
viii. Subject to the disclosures made herein above, ACL, its affiliates, their directors and the employees may from time to time, effect or have effected
an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report.
Each of these entities functions as a separate, distinct entity, independent of each other. The recipient shall take this into account before
interpreting the document.
ix. This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through
analysis of ACL. The views expressed are those of analyst and the Company may or may not subscribe to all the views expressed therein
x. This document is being supplied to the recipient solely for information and may not be reproduced, redistributed or passed on, directly or
indirectly, to any other person or published, copied, in whole or in part, for any purpose and the same shall be void where prohibited.

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 09

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

xi. Neither the whole nor part of this document or copy thereof may be taken or transmitted into the United States of America “U.S. Persons”
(except to major US institutional investors (“MII”)), Canada, Japan and the People’s Republic of China (China) or distributed or redistributed,
directly or indirectly, in the United States of America (except to MII), Canada, Japan and China or to any resident thereof.
xii. Where the report is distributed within the United States ("U.S.") it is being distributed pursuant to a chaperoning agreement with Axis USA, LLC
pursuant to Rule 15a-6. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this
document may come shall inform themselves about, and observe, any such restrictions.
xiii. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental,
special or consequential including but not limited to loss of capital, revenue or profits that may arise from or in connection with the use of the
information.
xiv. Copyright of this document vests exclusively with Axis Capital Limited.

Research Disclosure - NOTICE TO US INVESTORS:

This report was prepared, approved, published and distributed by Axis Capital Limited, a company located outside of the United States (a “non-US
Company”). This report is distributed in the U.S. by Axis Capital USA LLC, a U.S. registered broker dealer, which assumes res ponsibility for the research
report’s content, and is meant only for major U.S. institutional investors (as defined in Rule 15a-6 under the U.S. Securities Exchange Act of 1934 (the
“Exchange Act”)) pursuant to the exemption in Rule 15a-6 and any transaction effected by a U.S. customer in the securities described in this report must be
effected through Axis Capital USA LLC rather than with or through the non-US Company.

Neither the report nor any analyst who prepared or approved the report is subject to U.S. legal requirements or the Financial Industry Regulatory Authority,
Inc. (“FINRA”) or other regulatory requirements pertaining to research reports or research analysts. The non-US Company is not registered as a broker-
dealer under the Exchange Act or is a member of the Financial Industry Regulatory Authority, Inc. or any other U.S. self-regulatory organization. The non-US
Company is the employer of the research analyst(s) responsible for this research report. The research analysts preparing this report are resident outside the
United States and are not associated persons of any US regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a US
broker-dealer, and are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with US rules or regulations
regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

The non-US Company will refrain from initiating follow-up contacts with any recipient of this research report that does not qualify as a Major Institutional
Investor, or seek to otherwise induce or attempt to induce the purchase or sale of any security addressed in this research report by such recipient.

ANALYST DISCLOSURES
1. The analyst(s) declares that neither he/ his relatives have a Beneficial or Actual ownership of > 1% of equity of subject company/ companies;
2. The analyst(s) declares that he has no material conflict of interest with the subject company/ companies of this report;
3. The research analyst (or analysts) certifies that the views expressed in the research report accurately reflect such research analyst's personal views
about the subject securities and issuers; and
4. The research analyst (or analysts) certifies that no part of his or her compensation was, is, or will be directly or indirectly related to the specific
recommendations or views contained in the research report.

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 010

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 02 AUG 2019 Quarterly Update
MARICO
FMCG

Axis Capital Limited

Axis House, C2, Wadia International Centre, P.B Marg, Worli, Mumbai 400 025, India.
Tel:- Board +91-22 4325 2525; Dealing +91-22 2438 8861-69;
Fax:- Research +91-22 4325 1100; Dealing +91-22 4325 3500

New Rating system effective 12 April, 2019 Previous Rating system

DEFINITION OF RATINGS DEFINITION OF RATINGS
Ratings Expected absolute returns over 12 months Ratings Expected absolute returns over 12 months
BUY More than 15% BUY More than 10%
ADD Between 5% to 15% HOLD Between 10% and -10%
REDUCE Between 5% to -10 % SELL More than -10%
SELL More than -10%

Note: For a transitory period from 12 April 2019 until 30 June 2019, the new rating system and the previous rating system will be used in parallel.
New research will be published under the new rating methodology, but existing recommendations will only be changed to the new rating system as and
when new research is published in ordinary course of business.

Marico (MRCO.BO, MRCO IN) Price and Recommendation History

CMP Buy Add Hold Reduce Sell Under Review Not Rated
450 (Rs)
400
350
300
250
200
150
100
50
0
Nov-16

Feb-17

Nov-17

Feb-18

Feb-19
Nov-18
Dec-18
Dec-16

Dec-17
Oct-16

Oct-17

Oct-18
May-17

May-18

May-19
Aug-17

Aug-18

Aug-19
Aug-16

Jan-17

Apr-17

Jul-17

Jan-18

Apr-18

Jul-18

Jan-19

Jul-19
Apr-19
Mar-17

Mar-18

Mar-19
Jun-17

Jun-18

Jun-19
Sep-18
Sep-16

Sep-17

Dat e Tar ge t P r i ce Re co Dat e Tar ge t P r i ce Re co Dat e Tar ge t P r i ce Re co Dat e Tar ge t P r i ce Re co

5-Aug-16 230 Sell 19-Jun-17 250 Sell 19-Dec-17 260 Sell 9-Jul-18 310 Hold
4-Oct-16 230 Sell 11-Jul-17 250 Sell 4-Jan-18 280 Sell 4-Aug-18 340 Hold
18-Oct-16 230 Sell 21-Jul-17 250 Sell 18-Jan-18 280 Sell 10-Oct-18 345 Buy
28-Oct-16 230 Sell 1-Aug-17 255 Sell 12-Feb-18 290 Hold 1-Nov-18 360 Buy
2-Feb-17 225 Sell 17-Aug-17 255 Sell 19-Feb-18 290 Hold 16-Nov-18 360 Buy
22-Feb-17 225 Sell 21-Aug-17 255 Sell 21-Mar-18 290 Hold 28-Nov-18 410 Buy
12-Apr-17 225 Sell 3-Oct-17 255 Sell 9-Apr-18 290 Hold 5-Dec-18 410 Buy
19-Apr-17 225 Sell 5-Oct-17 255 Sell 23-Apr-18 290 Hold 7-Jan-19 410 Buy
2-May-17 250 Sell 17-Oct-17 255 Sell 3-May-18 310 Hold 5-Feb-19 410 Buy
19-May-17 250 Sell 30-Oct-17 260 Sell 29-May-18 310 Hold 6-May-19 380 Add
23-May-17 250 Sell 13-Nov-17 260 Sell 5-Jun-18 310 Hold
9-Jun-17 250 Sell 16-Nov-17 260 Sell 27-Jun-18 310 Hold
Source: Axis Capital

Axis Capital is available on Bloomberg (AXCP<Go>), Reuters.com, Firstcall.com and Factset.com 011

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