Marico - Business Standardsmartinvestor.business-standard.com/BSCMS/PDF/... · Parachute and...

Please refer to important disclosures at the end of this report 1

(` cr) 3QFY11 3QFY10 % yoy Angel Est % Diff

Revenue 817.7 669.6 22.1 814.5 0.4

EBITDA 99.7 98.8 0.9 112.8 (11.6)

OPM (%) 12.2 14.8 (257bp) 13.9 (166bp)

PAT 69.5 62.2 11.8 78.9 (11.8)

Source: Company, Angel Research

Marico posted mix set of numbers for 3QFY2011. Overall volume growth of a strong 15%, coupled with price hike of ~5% and ~8% taken in close succession resulted in top-line growth of ~22% yoy (in line with our estimates). However, earnings grew a modest 11.8% yoy despite lower tax rate and higher other income, impacted by significant margin contraction. We downgrade the stock from Accumulate to Reduce. Earnings impacted by high input costs: Marico posted steady top-line growth of ~22% yoy to `817.7cr led by both volume and value growth. Its core brands, Parachute and Saffola, posted volume growth of 5% and 13%, respectively. Kaya grew 40% yoy (including Derma Rx) and 11% yoy (excluding Derma Rx) with declining sequential losses in standalone Kaya. The international business continued its steady growth momentum moving up 33% yoy. However, earnings grew at a modest 11.8% yoy, despite lower tax rate and higher other income, impacted by the unrelenting copra prices (up ~62% yoy). Outlook and Valuation: Post the 3QFY2011 results, we have revised our estimates downwards: 1) revised revenue by ~2% to factor in – a) we believe there is high risk of down-trading for Marico as consumers shift to lower price/loose coconut oil variants, which will impact its sales volume in 4Q, and b) management would have to resort to price cuts post the cyclical downturn of the raw material inflation to re-capture lost volumes, which will impact revenues in FY2012. Nonetheless, we factor in ~15% yoy growth in revenues over FY2011-12, 2) earnings revised by 9-18% to factor in 25-60% yoy inflation in rice bran oil and copra prices, which were higher than anticipated. Hence, we downgrade the stock from Accumulate to Reduce, with a Target Price of `119 (`136) based on 23x revised FY2012E EPS of `5.2 (`5.7). Key Financials (Consolidated) Y/E March (` cr) FY2009 FY2010 FY2011E FY2012E

Net Sales 2,388 2,661 3,065 3,510

% chg 25.4 11.4 15.2 14.5

Net Profit (Adj) 203.8 241.5 246.1 317.1

% chg 28.6 18.5 1.9 28.8

EBITDA (%) 12.7 14.1 11.7 13.0

EPS (`) 3.3 3.9 4.0 5.2

P/E (x) 38.5 32.5 31.8 24.7

P/BV (x) 17.1 11.9 9.3 7.1

RoE (%) 53.0 43.6 32.8 32.6

RoCE (%) 35.7 32.5 25.7 29.5

EV/Sales (x) 3.3 3.0 2.6 2.3

EV/EBITDA (x) 26.5 21.6 22.2 17.1 Source: Company, Angel Research

REDUCE CMP `128 Target Price `119

Investment Period 12 months Stock Info

Sector FMCG

Market Cap (` cr) 7,778

Beta 0.5

52 Week High / Low 153/94

Avg. Daily Volume 1,64,720

Face Value (`) 1

BSE Sensex 18,684

Nifty 5,604

Reuters Code MRCO.BO

Bloomberg Code MRCOIN

Shareholding Pattern (%)

Promoters

63.0

MF / Banks / Indian Fls

7.3

FII / NRIs / OCBs

25.5

Indian Public / Others 4.2

Abs. (%) 3m 1yr 3yr

Sensex (6.6) 14.7 (1.7)

Marico 4.2 30.1 106.9

Chitrangda Kapur 022 – 3935 7800 Ext: 6822

[email protected]

Sreekanth P.V.S 022 – 3935 7800 Ext: 6841

[email protected]

Marico Performance Highlights

Marico|3QFY2011 Result Update

January 27, 2010


January 27, 2010 2

Exhibit 1: Quarterly performance (consolidated)

Y/E March (` cr) 3QFY11 3QFY10 % yoy 9MFY11 9MFY10 % chg

Net Sales 817.7 669.6 22.1 2,386.7 2,058.5 15.9 Consumption of RM 430.7 318.2 35.4 1,222.0 994.5 22.9 (% of Sales) 52.7 47.5

51.2 48.3

Staff Costs 55.6 47.4 17.4 167.9 146.5 14.6 (% of Sales) 6.8 7.1

7.0 7.1

Advertising 90.1 84.8 6.3 278.8 261.1 6.8 (% of Sales) 11.0 12.7

11.7 12.7

Other Expenses 141.6 120.4 17.5 413.6 366.3 12.9 (% of Sales) 17.3 18.0

17.3 17.8

Total Expenditure 718.0 570.8 25.8 2,082.2 1,768.2 17.8 Operating Profit 99.7 98.8 0.9 304.4 290.3 4.9 OPM (%) 12.2 14.8

12.8 14.1

Interest 7.6 6.5 18.2 21.1 20.7 1.9 Depreciation 14.6 16.6 (11.7) 26.0 27.8 (6.5) Other Income 6.9 5.7 22.2 18.5 13.0 42.4 PBT (excl. Extr. Items) 84.3 81.4 3.6 275.8 254.7 8.3 Extr. Income/(Expense) 0.0 0.0

0.0 (4.1)

PBT (incl. Extr. Items) 84.3 81.4 3.6 275.8 250.7 10.0 (% of Sales) 10.3 12.2

11.6 12.2

Provision for Taxation 13.3 18.3 0.0 42.2 52.6 (19.9) (% of PBT) 15.8 22.5

15.3 21.0

Minority Interest 1.4 0.9

4.2 1.0

Reported PAT 69.5 62.2 11.8 229.5 197.1 16.4 PATM 8.5 9.3

9.6 9.6

Equity shares (cr) 60.9 60.9

60.9 60.9

Reported EPS (`) 1.1 1.0 11.8 3.8 3.2 16.4 Adjusted PAT 69.5 62.2 11.8 229.5 201.1 14.1


Parachute volume low at ~5%, Saffola manages double-digit growth Marico reported top-line growth of 22.1% yoy to `817.7cr (`669.6cr) in line with our estimates and driven by both volume and value growth. While overall volume growth stood at ~15%, with core brands Parachute (rigids) and Saffola posting volume growth of 5% and 13% respectively, for the quarter, value growth was a function of the price hike of ~5% and ~8% taken in close succession recently. Marico has this far taken a weighted average price hike of ~24% (including the recent 7-8% price hike taken in Parachute, which would reflect in 4Q). We believe that the price hikes taken so far have been very steep and with the copra prices showing no sign of cooling, further price hikes in the future cannot be ruled out. While there are no concerns about Parachute maintaining its leadership position and Marico’s ability to pass on the increase in raw material prices, we would remain cautious. We believe that the volumes would be impacted going forward as consumers shift to low price/loose coconut oil variants due to absence of stickiness in this product segment.


January 27, 2010 3

Marico’s international business continued to post steady growth of 33% yoy in constant currency terms (29% yoy reported growth adjusted for rupee appreciation). Kaya solutions business posted strong growth of 40% yoy to `62cr with declining sequential losses in standalone Kaya.

Exhibit 2: Top-line growth driven by volume and value growth


Earnings impacted by significant margin contraction

In terms of earnings, Marico posted a growth of 11.8% yoy to `69.5cr (`62.2), below our estimates and largely aided by a 283bp decline in the tax rate due to production at manufacturing facilities situated in tax free zones along with higher other income, which rose 22% yoy. Management has guided for an effective tax rate of ~16% in FY2011 and ~20% in FY2012.

OPM down by 257bp yoy as gross margins contract by 515bp yoy

Marico witnessed yoy contraction in gross margin by 257bp as the copra, rice bran oil, safflower oil and HDPE prices inched higher by 62%, 25%, 3% and 4%, respectively. Management was able to maintain operating profit at last year levels, by reducing other operating costs, which saw ad-spend (down 163bp yoy), other expenses (down 67bp yoy) decline. While Kaya’s ad-spends are being kept low, with a change in the strategy to focus on press and digital media instead of television advertising, other expenses are being reined through lower provisioning for excise duty at ~75% to `9.6cr (~100% done in 3QFY2010 to `11cr).

Exhibit 3: Moderate Earnings growth at ~12% levels


Exhibit 4: Input costs on uptrend, OPM contracts


-

5.0

10.0

15.0

20.0

25.0

-

100

200

300

400

500

600

700

800

900

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

(%)

(`cr

)

Top-line (LHS) yoy growth (RHS)

(20.0)

-

20.0

40.0

60.0

80.0

100.0

120.0

10

20

30

40

50

60

70

80

3Q09

1Q10

3Q10

1Q11

3Q11

( %)

(`cr

)

PAT (LHS) yoy growth (RHS)

12.7 13.3 13.8 13.7 14.8 14.1 13.3 12.7 12.2

44.9 49.6 49.7 52.9 52.5 56.1

49.0 50.2 47.3

-

10.0

20.0

30.0

40.0

50.0

60.0

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

(%)

OPM Gross margin


January 27, 2010 4

Growth in core brands muted on account of steep price hikes Parachute coconut oil in rigid packs recorded volume growth of ~5% yoy on a high base (discounts and offers running in 3QFY2010). The volume growth came in low, impacted by price hikes of ~5% and ~8% taken in close succession takrecently resulting in a cumulative ~24% weighted average price hike taken this far. The Saffola franchise registered volume growth of 13% yoy and overall value growth of ~24% yoy, aided partially by increase in prices in select SKUs. In terms of input costs, while safflower oil price witnessed a spike of ~25%, rice bran oil prices trended lower by ~3% during the quarter. Management maintained its guidance for Saffola Oats and Saffola Arise, expecting a cumulative growth in revenue to ~`40–45cr in FY2011.

Exhibit 5: Parachute volume growth at its lowest


Exhibit 6: Saffola sustains double-digit growth


Hair oil volumes grow 31%, plans to enter cooling oils on track During the quarter, all hair oils brands of Marico recorded healthy growth with hair oils portfolio in rigid packs registering ~31% yoy growth led by pre-festive sales. The prototyping of Parachute hair oil in Andhra Pradesh has been received well. Most of the hair oil variants registered growth of ~20% and the combined market share has grown YTD by 140bp to 22.8%.

International business registers strong 33% growth International FMCG business grew a strong 33% yoy (28% yoy adjusted for currency movement) during the quarter led by 25% volume growth and 8% price-led growth. It now constitutes ~23% of the group turnover. In Bangladesh, Parachute commanded volume share of ~70% during the quarter. Top-line was supported by price hikes similar to India, but with a lag effect. Hair dye code established itself as the second largest hair dye brand in Bangladesh with market share of ~25%. The launch of Saffola in 1QFY2011 has seen positive response and is expected to grow at a healthy pace. In the Middle East, both Parachute Cream and Parachute Gold hair oil recorded healthy growth. Marico’s business in Egypt continued to post steady growth and maintained its market share at ~57%. In GCC countries, Parachute cream maintained its leadership position with a market share of ~27%. South Africa registered robust growth of ~30% yoy driven by strong growth across brands. Integration of the recently acquired OTC healthcare

9 9 9 10

8

10

14

10

5

-

2

4

6

8

10

12

14

16

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

(%)

(3)

11 13

22

18

13

18 18

13

(5)

-

5

10

15

20

25

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

(%)


January 27, 2010 5

brand, Ingwe, in South Africa and Code 10 in Malaysia is on track. While including Ingwe, South Africa’s portfolio increased by ~45% yoy, Code 10 registered a growth of ~30% on the back of brand renewal efforts and distribution gains.

Exhibit 7: International business - 33% yoy growth on ~25% volume growth


44 45

63

49

24

16

29 23

33

-

10

20

30

40

50

60

70

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

(%)


January 27, 2010 6

Kaya showing signs of revival, cuts losses

Kaya posted revenue growth of ~40% during the quarter led by the acquisition of Derma Rx. The revenue growth (ex. Derma Rx) stood at healthy 11% yoy, with the same clinic stores growing by ~8%. During the quarter, Kaya India incurred a loss of `0.9cr (loss of `3.5cr in 2QFY2011), aided by low advertising and promotion (A&P) spend. Kaya consolidated reported operating profit of `4.1cr. During the quarter, Kaya opened a new clinic in Middle East and management has indicated introduction of products from Derma Rx in the Middle East by 4QFY2011. Derma Rx products were introduced in India during the quarter.

Exhibit 8: Kaya registers same clinic growth, revenue up by ~40% yoy


-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

-

10

20

30

40

50

60

70

3QFY09 1QFY10 3QFY10 1QFY11 3QFY11

(yoy

%)

(`cr

)

Top-line (LHS) yoy growth (RHS)


January 27, 2010 7

Investment Concerns

Volumes in a downtrend, expect revenues to take a hit: We expect Marico to post lower volumes in its core brands in 4QFY2011 on account of down-trading to lower price/ loose coconut oil variants as consumers feel the pinch of rising food inflation. Moreover, post the flush season (in Tamil Nadu, Feb-April) when the raw material inflation cycle reverses its trends (as mentioned by management in the result con-call), we expect Marico to resort to price cuts to garner lost volumes, which will impact value growth and hence we have pruned our revenue estimates by ~2% for FY2011 and FY2012. Nonetheless, we expect ~15% yoy growth in revenues for FY2011–12.

International business well on track, however domestic business on shaky wicket: Marico has reported India consumer business growth at ~19% with growth from rural consumers at 28% yoy, while the urban growth rate plateaus at ~17%. The rising copra and palm oil prices are expected to hit the consumers buying power in rural India (rural contribution at ~27% to overall revenues) owing to which we expect lower rural contribution to overall revenues. On the other hand, the company’s international business is well on track with all geographies reporting strong numbers. We have modeled 11% and 26% CAGR in domestic and international businesses over FY2010-12, respectively. However, we do not expect the raw material inflation to cool down significantly and hence have pruned our margin estimates for FY2011 and FY2012 by 180bp and 75bp, respectively.

Outlook and Valuation We expect 4QFY2011 to be a better quarter aided by the recent price hikes in Parachute, improving profitability in the international business, better performance by Kaya and lower tax rate. However, headwinds of down-trading and margin pressures due to raw material inflation are likely to persist. At the CMP of `128, the stock is trading at 24.7x FY2012E earnings i.e. at 7-8% premium to its historical valuations). Hence, we downgrade the stock from Accumulate to Reduce, with a Target Price of `119 (`136) based on 23x revised FY2012E EPS of `5.2 (`5.7).


January 27, 2010 8

Exhibit 9: Key Assumptions

Sales (` cr) FY2009 FY2010 FY2011E FY2012E Focus Brands 1,926 2,128 2,433 2,805 Parachute (Rigids) 572 564 579 628 Nihar (CNO) 86 91 99 108 Hair Oils (Incl. Nihar) 336 363 412 494 Saffola 334 351 386 436 International FMCG 427 578 712 852 Kaya (Incl. Derma Rx from FY11) 157 182 246 287

Non Focus Brands 462 533 632 705 Total Revenue 2,388 2,661 3,065 3,510

yoy % Growth Focus Brands 24.1 10.5 14.3 15.3 Parachute (Rigids) 7.3 (1.6) 2.7 8.5 Nihar (CNO) 16.0 6.0 9.0 9.0 Hair Oils (Incl. Nihar) 33.0 8.0 13.5 20.0 Saffola 23.0 5.0 10.0 13.0 International FMCG 38.2 35.5 23.1 19.8 Kaya (Incl. Derma Rx from FY11) 57.6 15.7 35.3 16.6

Non Focus Brands 30.4 15.2 18.7 11.5 Total Revenue 25.3 11.4 15.2 14.5



January 27, 2010 9

Exhibit 10: Peer Valuation Company Reco Mcap CMP TP* Upside P/E (x) EV/Sales (x) RoE (%) CAGR#

(` cr) (`) (`) (%) FY11E FY12E FY11E FY12E FY11E FY12E Sales PAT

Asian Paints Accumulate 24,942 2,600 3,016 16.0 27.2 22.4 3.2 2.6 40.5 37.7 17.9 20.1

Colgate Neutral 11,438 841 820 (2.5) 25.7 22.6 4.9 4.2 116.7 102.2 14.6 9.5

Dabur Buy 16,638 96 121 26.6 27.6 20.5 3.9 2.9 54.5 54.1 27.7 27.1

GSKCHL Accumulate 8,622 2,050 2,279 11.2 28.5 23.5 3.4 2.8 30.2 30.1 17.5 20.0

GCPL Neutral 12,491 386 400 3.6 29.8 21.2 3.9 3.2 33.9 30.4 44.5 28.4

HUL Neutral 59,124 271 282 4.1 26.4 21.1 2.9 2.5 75.8 78.6 12.0 12.9

ITC Accumulate 128,139 168 186 10.8 25.2 21.9 5.7 4.9 32.9 31.9 15.8 20.1

Marico Reduce 7,778 128 120 (6.3) 31.8 24.7 2.6 2.3 32.8 32.6 14.9 14.6

Nestle Neutral 34,239 3,551 3,501 (1.4) 42.1 34.3 5.5 4.7 115.1 106.6 16.8 21.7

Source: Company, Angel Research, Note: #denotes CAGR for FY2010-12E, * In case of Neutral recommendation, TP = Fair value

Exhibit 11: Angel v/s Consensus estimates Top-line (` cr) FY2011E FY2012E EPS (`) FY2011E FY2012E Angel estimates 3,065 3,510 Angel estimates 4.0 5.2 Consensus 3,100 3,594 Consensus 4.8 5.8 Diff (%) (1.1) (2.3) Diff (%) (16.0) (10.3)

Source: Bloomberg, Angel Research

Exhibit 12: Absolute returns of Marico v/s Sensex


Exhibit 13: One-yr forward P/E


Exhibit 14: One-yr forward P/E

Source: Company, Angel Research, Note: Blue-line indicates 5-year average

Exhibit 15: One-yr forward Premium v/s Sensex

Source: Company, Angel Research, Note: Blue-line indicates 5-year average

80%90%

100%110%120%130%140%150%160%

Jan-

10

Feb-

10

Mar

-10

Apr

-10

May

-10

Jun-

10

Jul-

10

Aug

-10

Sep-

10

Oct

-10

Nov

-10

Dec

-10

Jan-

11

Sensex Marico

-20 40 60 80

100 120 140 160

Apr

-05

Jul-

05O

ct-0

5Ja

n-06

Apr

-06

Jul-

06O

ct-0

6Ja

n-07

Apr

-07

Jul-

07O

ct-0

7Ja

n-08

Apr

-08

Jul-

08O

ct-0

8Ja

n-09

Apr

-09

Jul-

09O

ct-0

9Ja

n-10

Apr

-10

Jul-

10O

ct-1

0Ja

n-11

Shar

e Pr

ice

(`)

15x 18x 21x 24x

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Apr

-02

Sep-

02Fe

b-03

Jul-

03D

ec-0

3M

ay-0

4O

ct-0

4M

ar-0

5A

ug-0

5Ja

n-06

Jun-

06N

ov-0

6A

pr-0

7Se

p-07

Feb-

08Ju

l-08

Dec

-08

May

-09

Oct

-09

Mar

-10

Aug

-10

Jan-

11

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Apr

-02

Sep-

02Fe

b-03

Jul-

03D

ec-0

3M

ay-0

4O

ct-0

4M

ar-0

5A

ug-0

5Ja

n-06

Jun-

06N

ov-0

6A

pr-0

7Se

p-07

Feb-

08Ju

l-08

Dec

-08

May

-09

Oct

-09

Mar

-10

Aug

-10

Jan-

11


January 27, 2010 10

Profit & Loss Statement (Consolidated) Y/E March (` cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Gross sales 1,559 1,907 2,390 2,662 3,067 3,512

Less: Excise duty 2 2 2 1 2 2

Net Sales 1,557 1,905 2,388 2,661 3,065 3,510

Total operating income 1,557 1,905 2,388 2,661 3,065 3,510

% chg 36.1 22.4 25.4 11.4 15.2 14.5

Total Expenditure 1,358 1,659 2,084 2,286 2,707 3,054

Cost of Materials 804 981 1,278 1,262 1,573 1,760

Advertising Exp 212 244 243 351 374 439

Personnel 91 127 166 190 215 242

Others 251 307 398 483 546 613

EBITDA 199 246 304 375 359 456

% chg 37.7 24.0 23.4 23.4 (4.4) 27.2

(% of Net Sales) 12.8 12.9 12.7 14.1 11.7 13.0

Depreciation& Amortisation 52 31 36 60 55 60

EBIT 147 215 268 315 303 397

% chg 47.2 47.1 24.5 17.5 (3.8) 30.8

(% of Net Sales) 9.4 11.3 11.2 11.8 9.9 11.3

Interest & other Charges 21 31 36 26 24 20

Other Income 10 10 12 18 24 29

(% of PBT) 7.5 4.9 5.0 5.9 8.0 7.0

Share in profit of Associates 0 0 0 0 0 0

Recurring PBT 136 195 245 308 303 405

% chg 38.8 43.0 25.8 25.7 (1.5) 33.5

Extraordinary Expense/(Inc.) (14) (11) 15 10 0 0

PBT (reported) 150 205 230 298 303 405

Tax 37 36 41 64 52 81

(% of PBT) 27.3 18.5 16.7 20.9 17.0 20.0

PAT (reported) 113 169 189 234 252 324

Add: Share of associates 0 0 0 0 0 0

Less: Minority interest (MI) 0 0 (0) 2 6 7

PAT after MI (reported) 113 169 189 232 246 317

ADJ. PAT 99 158 204 241 246 317

% chg 13.8 60.3 28.6 18.5 1.9 28.8

(% of Net Sales) 6.3 8.3 8.5 9.1 8.0 9.0

Basic EPS (`) 1.6 2.6 3.3 4.0 4.0 5.2

Fully Diluted EPS (`) 1.6 2.6 3.3 3.9 4.0 5.2

% chg 13.8 60.3 28.6 18.5 1.9 28.8


January 27, 2010 11

Balance Sheet (Consolidated) Y/E March (` cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

SOURCES OF FUNDS

Equity Share Capital 61 61 61 61 61 61

Preference Capital 0 0 0 0 0 0

Reserves& Surplus 131 254 393 593 785 1,038

Shareholders Funds 192 315 454 654 847 1,099

Minority Interest 0 0 0 13 13 13

Total Loans 251 358 374 446 392 337

Total Liabilities 443 673 828 1,112 1,251 1,448

APPLICATION OF FUNDS

Gross Block 250 315 414 468 535 591

Less: Acc. Depreciation 139 163 203 242 303 368

Net Block 111 151 210 226 232 223

Capital Work-in-Progress 23 65 58 113 80 71

Goodwill 76 126 128 146 176 181

Investments 0 0 12 83 83 83

Deferred Tax Asset 115 98 64 62 62 62

Current Assets 400 528 670 897 1,125 1,418

Cash 43 75 90 111 197 315

Loans & Advances 72 106 130 190 215 246

Other 286 347 450 596 713 858

Current liabilities 283 295 314 414 506 589

Net Current Assets 118 233 355 483 619 829

Mis. Exp. not written off 0.12 - - - - -

Total Assets 443 673 828 1,112 1,251 1,448


January 27, 2010 12

Cash Flow Statement (Consolidated) Y/E March (` cr) FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Profit before tax 150 205 230 298 303 405 Depreciation 52 31 36 60 55 60 Change in Working Capital (6) (89) (75) (135) (88) (125) Interest / Dividend (Net) 21 28 30 15 11 5 Direct taxes paid 37 36 41 64 52 81 Others 10 14 2 39 34 39 Cash Flow from Operations 189 153 182 212 263 303 Inc./ (Dec.) in Fixed Assets (300) (155) (95) (149) (64) (51) Inc./ (Dec.) in Investments 23 0 (12) (71) (3) (19) Cash Flow from Investing (277) (155) (107) (219) (67) (71) Issue of Equity 145 0 0 18 0 0 Inc./(Dec.) in loans 11 107 16 72 (54) (55) Dividend Paid (Incl. Tax) 47 45 47 47 47 54 Interest / Dividend (Net) 21 28 30 15 11 5 Cash Flow from Financing 89 35 (60) 28 (111) (114) Inc./(Dec.) in Cash 1 32 15 21 85 118 Opening Cash balances 41 43 75 90 111 197 Closing Cash balances 43 75 90 111 197 315

Key Ratios Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E

Valuation Ratio (x)

P/E (on FDEPS) 79.3 49.5 38.5 32.5 31.8 24.7

P/CEPS 51.5 41.1 32.5 25.8 26.0 20.8

P/BV 40.4 24.7 17.1 11.9 9.3 7.1

Dividend yield (%) 0.5 0.5 0.5 0.5 0.6 0.7

EV/Sales 5.1 4.2 3.3 3.0 2.6 2.3

EV/EBITDA 40.2 32.7 26.5 21.6 22.2 17.1

EV / Total Assets 18.0 12.0 9.7 7.3 6.4 5.4

Per Share Data (`)

EPS (Basic) 1.6 2.6 3.3 4.0 4.0 5.2

EPS (fully diluted) 1.6 2.6 3.3 3.9 4.0 5.2

Cash EPS 2.5 3.1 3.9 4.9 4.9 6.1

DPS 0.6 0.7 0.7 0.7 0.8 0.9

Book Value 3.2 5.2 7.4 10.7 13.8 17.9

Returns (%)

RoCE 31.0 38.6 35.7 32.5 25.7 29.4

Angel RoIC (Pre-tax) 50.7 54.2 49.6 43.0 35.0 43.3

RoE 43.6 62.5 53.0 43.6 32.8 32.6

Turnover ratios (x)

Asset Turnover 3.9 5.0 4.9 4.6 4.6 4.7

Inventory / Sales (days) 52 50 52 61 63 66

Receivables (days) 15 17 17 21 21 23

Payables (days) 63 49 42 46 49 49

Net working capital (days) 18 30 41 51 50 54


January 27, 2010 13

Research Team Tel: 022 - 3935 7800 E-mail: [email protected] Website: www.angelbroking.com

Disclaimer

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.

Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information.

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Marico 1. Analyst ownership of the stock No 2. Angel and its Group companies ownership of the stock No 3. Angel and its Group companies' Directors ownership of the stock No 4. Broking relationship with company covered No Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors. Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%) Reduce (-5% to 15%) Sell (< -15%)

Marico - Business Standardsmartinvestor.business-standard.com/BSCMS/PDF/... · Parachute and...

Documents

Transcript of Marico - Business Standardsmartinvestor.business-standard.com/BSCMS/PDF/... · Parachute and...