Bullish indicating open at $55-$60, IPO prices at $37
On Monday, UBS analyst Amit Sachdeva downgraded Marico Ltd (NSE:MRCO:IN) from Buy to Neutral, while increasing the price target to INR770.00 from INR650.00. Sachdeva pointed out that Marico’s strong performance has been consistent, meeting revenue and earnings growth expectations. The company has been successful in navigating the market, especially with its execution strategies.
Marico’s business has been buoyed by several factors, including the peak of copra prices and the anticipation of an easing inflation cycle expected to commence around the first quarter of FY26, with improved margins by the second quarter of FY26. The company’s packaged food business in the health and wellness sector is also growing by more than 20% per annum, becoming a significant contributor to its value.
In addition to its core business, Marico has made strides in establishing successful digital wellness and personal care brands. One such example is Plix, which has been scaling up effectively, achieving an annual recurring revenue (ARR) of Rs5 billion. These developments have positioned Marico as a robust player in the market.
Despite these positive aspects, UBS suggests that the stock’s multiple expansion cycle may have come to an end. This follows Marico’s outperformance last year, even amidst an adverse copra cycle. The firm forecasts that any potential upside in the share price will now be driven by earnings. UBS has projected revenue and earnings compound annual growth rates (CAGRs) of 9% and 11.6%, respectively, for the fiscal years 2025 to 2027.
The revised price target reflects an increase over the previous figure, indicating UBS’s recognition of Marico’s growth potential despite the change in the stock’s rating. The new price target is set against the backdrop of the company’s consistent performance and strategic initiatives that are expected to contribute to its earnings growth over the coming years.
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