Marico Share Price Surge 8% Post Q4 Results: Buy, Sell, or Hold?

Marico's share price surged more than 8% in early trading on Tuesday, following a positive outlook from analysts after the company's fourth-quarter results. The stock climbed as high as 8.8%, reaching ₹577.80 each on the BSE. By 9:20 am IST, the shares had settled at a 7.50% increase, priced at ₹570.90 each on the BSE.

Although Marico's share price experienced a rise, opinions among brokerages varied regarding the FMCG giant following its Q4 results. Citi issued a buy rating for the stock and raised its target price, whereas CLSA maintained a sell rating, anticipating a decline in the stock's value.

Marico, a leading FMCG company, announced a consolidated net profit of ₹320 crore for the fourth quarter of FY24, marking a 4.9% increase from the same period in the previous year.

In Q4FY24, Marico's revenue from operations increased by 1.69% year-over-year to ₹2,278 crore, supported by a 3% volume growth in its domestic business and a 10% growth in constant currency terms in its international business. The company's EBITDA for the quarter climbed 12.5% to ₹442 crore, with the EBITDA margin widening by 190 basis points to 19.4%.

Marico's revenue and EBITDA for Q4FY24 matched the projections of Nuvama Institutional Equities. The brokerage firm is optimistic, suggesting that challenging times are likely over, citing early indications of a rural recovery, expected favorable rainfall, and a 6% price increase for Parachute in April 2024 to offset rising copra costs.

“We like Marico’s focus on improving volumes over long term and market share gains, a strategy that management has adhered to for the past few years. Even as the company has had an eye on market share, it compromised on margins," Nuvama Equities said.

Nuvama Equities has increased its FY26 earnings per share (EPS) forecast for Marico by 3.4%, reflecting an improved margin profile. The firm also raised the target valuation from 38x price-to-earnings (PE) to 40x. Consequently, Nuvama upgraded Marico from 'Hold' to 'Buy' and increased the share price target to ₹640 from the previous ₹574.

Citi, an international brokerage firm, has recommended a ‘Buy’ for Marico shares and increased the target price to ₹610 per share, as Marico's Q4 results aligned with Citi's forecasts. Citi expects Marico’s distribution initiatives and pricing strategies to fuel growth, and believes that a sustained emphasis on new product developments (NPDs) and innovations will contribute positively to overall growth.

Motilal Oswal expects the stock to rally 18% to ₹625 on the back of gradual improvement in volume trend. The analyst noted that the company has been sustaining double-digit EBITDA growth.

"The improvement in the rural market, market share gain, accelerated growth in Foods and Premium Personal Care, healthy growth in international business, and the normalisation of price cuts should help Marico deliver better revenue in FY25-26. To improve its distribution reach, Marico has also started ‘Project SETU,’ which helps to drive growth in GT through a transformative expansion of its direct reach," the brokerage said.

"The domestic operating environment during the quarter was closely akin to the preceding quarters of this year. Across various FMCG categories, premium and urban-centric segments stayed ahead of rural and mass segments," the FMCG company said.