Prime Stock Recommendation: A consumer stock on a compounding journey
N V Chandrachoodamani
Chandrachoodamani started his capital market career in mid 2000s with Equity Intelligence India and then worked with several capital market Intermediaries in various roles over the last 15 years. Most of his career experience has been in equity research and PMS. Most recently, he was with MOAT, a PMS firm. He is a graduate in mathematics, a post graduate in finance, and holds a CFP certification. LinkedIn|Twitter
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4 thoughts on “Prime Stock Recommendation: A consumer stock on a compounding journey”
In the recent Q1-2023 results, Sales and Profit both have declined on QoQ basis for Marico.
For more perspective, if we look at the Nifty FMCG index, it has risen almost 22% in 2023. While Marico has risen less than 5%. What are your thoughts? Is there a rethink on this stock or is it still a BUY? If so, why?
Welcome your query sir,
It’s better to look at numbers on a YoY basis. It’s also a matured sector.
In categories like oils, which is Marico’s core segment, there will be some commodity price impact on topline growth.
Btw, FMCG is a matured sector and Marico is also a matured Co. We are expecting only index-level returns from the stock. Anything beyond that “may” come from inorganic growth also
From one brand wonder “Parachute”, Marico is now riding on two brands, second being “saffola”. As mentioned in the report, it’s having a budding D2C business now in personal care & wellness space that are growing at a much faster rate.
So, we see this as a player with a good chance of delivering double digit earnings growth in the overall slow-growing FMCG Pack. Valuation also favours on a 1 year forward basis (FY24 basis). Hence our reco.
Thank you
Thank you for a writeup. A comparison with competitors would also add value to the article.
Welcome your query sir,
We recently wrote an article on FMCG sector where Cos are compared on financial performance and valuation
Pl find the link below. It may be helpful
https://staging.primeinvestor.in/fmcg-sector-at-the-crossroads/
Marico is more comparable to Dabur & Tata Cons due to its skewness towards foods category. Valuation is lower among the three in terms of PE ratio. And that is largely due to growth differences/ FY24 EPS estimate differences.
Otherwise these Cos have seasoned valuation in market due to large analyst coverage
Thank you
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