Marico Limited Complete Fundamental Analysis and Future Outlook
Marico Ltd was established in 1990 and today it’s one of India’s leading consumer products companies operating in the beauty and wellness space. The company operates in multiple brand categories of hair care, skin care, edible oils, health foods, male grooming and fabric care. The company has a workforce of 2350+ employees along with a 50% gender diversity. Marico has a presence in 25+ countries and a reach to 185+ Million households across the world.
- The company operates in the FMCG space where market dominance is achieved by distribution and branding. Its brands have a direct reach at 9+ lakh outlets in India. Marico owns the Parachute brand and is the world’s largest coconut oil manufacturer.
- The other popular domestic brands include Saffola, Hair & Care, Nihar, Livon, Set Wet, Mediker and Revive. These brands combined have a sales volume of 160+ Million per month. Marico touches 1 in every 3 lives in India.
- The International business has brands such as Parachute, HairCode, Fiancée, Caivil, Hercules, Black Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat that are localized to fulfil the lifestyle needs of the international consumers. Over the years the company has successfully developed a wide supply chain and a strong brand recall amongst its consumers.
- Overall the company has established its leadership in a niche FMCG business of haircare and wellness. This gives them a wide economic moat in the Industry.
I have evaluated the company on 10 fundamental categories and each has been given a rating out of 5 stars. From this, I have arrived at a combined stock rating for the company.
This is the summary of the analysis. You can read the detailed analysis with the excel models on my blog (Check the source link)
Source: Marico Fundamental Analysis and Future Outlook
Some insights for the coming years from management discussion & analysis (MD&A) and con calls are as follows.
- The company’s Q4 net profit for FY 2020 fell by 51% as compared to the previous year. This was mainly due to the disruption in supply chains. The company saw improvement in performance in January and February but witnessed a big hit in March, which led to a 4% drop in volumes. This was the worst volume growth in the last 10 quarters for the company.
- Sanitisation and innovation in food are two key areas that will drive the growth of the company in the Post COVID-19 era. Marico’s first product in the sanitisation business was a hand sanitiser, which it launched under the Mediker brand, and is now followed by Veggie Clean, a food and vegetable cleaner. The products are expected to be well-received by the market at least in the short term.
- Last year a trend of reverse migration from branded to loose products in case of hair oils was witnessed in the rural regions. Pricing intervention by the company is likely to arrest the trend in the future along with an increase in sales volume.
- The management sees an increased demand for healthy ready-to-cook meals due to new concepts such as work from home becoming a way of normal life. The company expects a significant growth in the ready-to-eat and ready-to-cook food categories where it has a presence under the Saffola brand and products such as Masala Oats and Saffola Fittify Gourmet.
Overall the company has solid fundamentals along with good growth prospects in the near future in the post COVID-19 era.
Subscribe to my Blog: Subscribe — Billion Dollar Valuation
Join my Telegram Channel
