RESULTS REVIEW 1QFY19 04 AUG 2018

Marico BUY

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

Last quarter of pain Marico reported an in-line quarter, marked with the end of margin pressure in this copra cycle. Net revenues grew by 20% YoY to Rs 20.3bn (exp. 17%). We anticipated margin pressure owing to copra inflation, partially offset by rationalization of ASP and other expenses. EBITDA/PAT grew by 9/10% (exp. 6/8%). India business (78% of total) grew by 23/12% value/volume driven by a favourable base (-4/-9%) and price hike in Parachute oil (PCNO). It is encouraging to note that PCNO volumes grew by 9% despite 29% price hike, which highlights the strength of the brand. We are cognizant of our ‘aggressive’ estimates (no change in estimates) vs. consensus and believe that with management’s positive commentary, copra deflation and macro recovery, the street will revise their estimates. Our bullishness on Marico is driven by (1) Judicious price cuts during a copra deflationary scenario to revive margins, (2) Aggressive product launches, (3) Opportunity for higher adv. spend during copra deflation to boost volumes, (4) Recovery in trade channels, (5) Corrective action for Saffola portfolio (gradual recovery), (6) VAHO to gain momentum (launch of Rs 10 LUP), (7) Improving consumption dynamics and (8) Recovery in international business.

We model full margin benefit from 3QFY19 onwards (price cuts will follow) and bake in EBITDA margin expansion of 180bps in FY19E. We model revenue/EBITDA/APAT CAGR of 15/24/25% over FY18-FY21E. We value Marico based on P/E of 35x Jun-20, and arrive at a TP of Rs 388 (earlier Rs 388). Maintain BUY.

Highlights for the quarter Favourable base drove growth: Parachute Value/Vol

grew by 38/9%, VAHO 12/15% and Saffola 9/10%. Rural/urban grew by 28/16% in value term. International grew by 9% (-1% in 1QFY18). Marico launched variants in their foods portfolio (~Rs 1.5bn) and is guiding for gaining scale (Rs 2bn in FY20) and more launches in the near term.

Last quarter of pain: Gradual price hike for PCNO vs. copra inflation led to 554bps GM decline to 42.3%. ASP and other expenses (% of sales) declined by 157bps and 134bps. Hence, EBITDA margin was down by 182bps YoY to 17.5% (exp. 17.5%). Lower taxes (85bps) led to PAT growth of 10% to Rs 2,557mn (exp. Rs 2,496mn)

Near-term outlook: Softening copra prices would result in healthy earnings in the coming quarters and a possible re-rating in the stock.

Financial Summary (Rs mn) 1QFY19 1QFY18 YoY (%) 4QFY18 QoQ (%) FY17 FY18 FY19E FY20E FY21E Net Sales 20,268 16,815 20.5 14,801 36.9 59,178 63,222 73,967 84,682 96,274 EBITDA 3,549 3,251 9.2 2,523 40.7 11,593 11,378 14,674 18,524 21,514 PAT 2,557 2,320 10.2 1,806 41.6 7,986 8,145 10,571 13,710 15,986 Diluted EPS (Rs) 1.98 1.80 10.2 1.40 41.6 6.19 6.31 8.19 10.62 12.38 P/E (x) 56.9 55.8 43.0 33.1 28.4 EV / EBITDA (x) 39.1 40.0 31.0 24.5 21.1 Core RoCE (%) 49.3 40.6 46.2 56.7 62.5 Source: Company, HDFC sec Inst Research

INDUSTRY FMCG

CMP (as on 03 Aug 2018) Rs 352

Target Price Rs 388

Nifty 11,361 Sensex 37,556

KEY STOCK DATA Bloomberg MRCO IN No. of Shares (mn) 1,290 MCap (Rs bn)/(US$ mn) 454/6,605

6m avg traded value (Rs mn) 559

STOCK PERFORMANCE (%) 52 Week high / low Rs 375 / 284 3M 6M 12M

Absolute (%) 10.8 15.4 7.8 Relative (%) 5.1 9.4 (6.7)

SHAREHOLDING PATTERN (%) Promoters 59.71

FIs & Local MFs 5.86 FPIs 27.76 Public & Others 6.67 Source : BSE

Naveen Trivedi naveen.trivedi@hdfcsec.com +91-22-6171-7324

Siddhant Chhabria siddhant.chhabria@hdfcsec.com +91-22-6171-7336

MARICO : RESULTS REVIEW 1QFY19

Page | 2

Quarterly Financials Year to March (Rs mn) 1QFY19 1QFY18 YoY (%) 4QFY18 QoQ (%) FY18 FY17 YoY (%) Net Revenue 20,268 16,815 20.5 14,801 36.9 63,222 59,178 6.8 Material Expenses 11,696 8,773 33.3 7,896 48.1 33,482 28,259 18.5 Employee Expenses 1,147 1,086 5.6 1,035 10.8 4,222 4,042 4.5 A&P Expenses 1,657 1,639 1.1 1,175 41.0 5,856 6,510 (10.0) Other Expenses 2,219 2,066 7.4 2,172 2.1 8,284 8,775 (5.6) EBITDA 3,549 3,251 9.2 2,523 40.7 11,378 11,593 (1.9) Depreciation 224 211 6.1 231 (2.8) 891 903 (1.4) EBIT 3,325 3,039 9.4 2,292 45.1 10,487 10,690 (1.9) Other Income 240 222 8.4 229 4.9 846 973 (13.0) Interest Cost 53 35 52.4 53 - 162 166 (2.5) PBT 3,512 3,226 8.9 2,468 42.3 11,171 11,497 (2.8) Tax 913 866 5.4 642 42.2 2,896 3,377 (14.3) PAT 2,557 2,320 10.2 1,806 41.6 8,145 7,986 2.0 EPS 2.0 1.8 10.2 1.4 41.6 6.3 6.2 2.0

As % Of Net Revenue 1QFY19 1QFY18 YoY (bps) 4QFY18 QoQ (bps) FY18 FY17 YoY (bps) Material Expenses (% of Net Sales) 57.7 52.2 554 53.4 436 53.0 47.8 521 Employee Expenses (% of Net Sales) 5.7 6.5 (80) 7.0 (133) 6.7 6.8 (15) A&P Expenses (% of Net Sales) 8.2 9.7 (157) 7.9 24 9.3 11.0 (174) Other Expenses (% of Net Sales) 10.9 12.3 (134) 14.7 (373) 13.1 14.8 (172) EBITDA Margin (%) 17.5 19.3 (182) 17.0 47 18.0 19.6 (159) Tax Rate (%) 26.0 26.8 (85) 26.0 (2) 25.9 29.4 (345) APAT Margin (%) 12.6 13.8 (118) 12.2 41 12.9 13.5 (61) Source: Company, HDFC sec Inst Research

Consol. revenues in 1QFY19 grew by 20% supported by a favourable base (-4% in 1QFY18) Overall volumes grew by 10% (-7% in 1QFY18) India/International business grew by 23/9% aided by a favourable base (-4/-1%) Copra inflation during 1QFY19 was up 42% YoY and -6% QoQ. The mgt has taken insufficient price hikes as a result gross margins were down 554bps Lower A&P spend and other expenses resulted in 182bps EBITDA margin contraction

MARICO : RESULTS REVIEW 1QFY19

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Quarterly Segmental Year to March (Rs mn) 1QFY19 1QFY18 YoY (%) 4QFY18 QoQ (%) FY18 FY17 YoY (%) Segmental Revenues Domestic 16,280 13,280 22.6 11,569 40.7 49,695 45,796 8.5 International 3,990 3,650 9.3 3,232 23.4 13,642 13,493 1.1 Total 20,270 16,930 19.7 14,801 37.0 63,337 59,289 6.8 Segmental EBIT Domestic 2,980 2,750 8.4 2,398 24.3 10,036 10,590 (5.2) International 790 740 6.8 340 132.6 2,104 1,987 5.9 Total 3,770 3,490 8.0 2,738 37.7 12,140 12,577 (3.5) Capital Employed Domestic 13,110 10,280 27.5 13,013 0.7 13,110 10,280 27.5 International 7,170 6,290 14.0 7,475 (4.1) 7,170 6,290 14.0 Total 20,280 16,570 22.4 20,488 (1.0) 20,280 16,570 22.4 Source: Company, HDFC sec Inst Research EBIT Margin Year to March (Rs mn) 1QFY19 1QFY18 YoY (bps) 4QFY18 QoQ (bps) FY18 FY17 YoY (bps) EBIT Margin (%) Domestic 18.3 20.7 (240) 20.7 (242) 20.2 23.1 (293) International 19.8 20.3 (47) 10.5 929 15.4 14.7 70 Total 18.6 20.6 (202) 18.5 10 19.2 21.2 (205) RoCE (%) Domestic 90.9 107.0 (16) 73.7 17 306.2 412.1 (106) International 44.1 47.1 (3) 18.2 26 117.4 126.4 (9) Total 74.4 84.2 (10) 53.4 21 239.4 303.6 (64) Source: Company, HDFC sec Inst Research Business Performance Value Growth (%) 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 Total 7 7 0 (1) (7) 2 (4) 6 15 12 20 India 7 4 (1) (3) (9) 6 (4) 12 19 12 23 International 9 16 6 5 - (8) (1) (8) 1 13 9 Source: Company, HDFC sec Inst Research

Domestic growth was primarily driven by PCNO value growth (copra inflation) International business continued to recover with 7% cc growth on a modest base of 6% International margins were under pressure due to input cost pressures in Bangladesh

MARICO : RESULTS REVIEW 1QFY19

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Segment Performance Particulars (%) 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 FMCG Business (India) Value Growth 7 4 (1) (3) (9) 6 (4) 12 19 12 23 Volume Growth 11 8 8 3 (4) 10 (9) 8 9 1 12 Parachute Coconut Oil Value Growth (1) (5) (12) (19) (12) 11 3 26 41 24 38 Volume Growth 4 6 7 (6) (1) 15 (9) 12 15 (5) 9 VAHO Value Growth 20 12 9 11 (13) 9 (7) 12 7 9 12 Volume Growth 21 11 9 11 (12) 10 (8) 12 8 11 15 Saffola (Refined Edible Oil) Value Growth 15 14 11 10 7 3 (8) 1 (4) (3) 9 Volume Growth 17 13 11 8 6 6 (9) 3 0 (1) 10 Source: Company, HDFC sec Inst Research Market Share Trend Particulars (%) 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 India Coconut Oils 59 58 58 58 58 58 59 59 59 59 Saffola 63 63 64 65 66 66 67 68 69 70 Value added Hair Oils 32 32 32 33 33 33 34 34 34 34 Livon and Silk & Shine 79 78 80 81 82 83 83 83 82 81 Hair Creams/Gels 59 61 62 63 63 62 62 63 63 63 Saffola Oats 27 27 28 28 27 27 27 28 28 29 Overseas Value Added Hair Oils (Bangladesh) 16 17 16 17 18 18 20 21 21 21 Parachute Coconut Oil (Bangladesh) 82 82 83 85 86 86 87 87 87 87 X-Men Men’s Shampoo (Vietnam) 38 38 37 37 37 38 39 40 39 39 Hair Code & Fiancée Hair Gels/Cream (Egypt) 56 56 55 54 54 54 54 53 na na Source: Company, HDFC sec Inst Research

Heartening to see Parachute volumes grew by 9% despite ~28% price hike. Reflects the strength of the brand Premiumisation journey for VAHO continues Saffola is expected to recover to historical levels by the end of FY19 More than 90% of the portfolio gained market share

MARICO : RESULTS REVIEW 1QFY19

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Geographical Performance (Constant Currency Growth) Geographies 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 Bangladesh (1) 11 (6) (5) - 5 12 11 12 17 9 MENA 45 13 6 5 (27) (46) (14) - 15 61 17 South Africa 8 10 8 9 4 6 5 1 32 32 7 South East Asia 3 8 15 12 6 11 7 (8) (4) (3) 0 Source: Company, HDFC sec Inst Research Consolidated Revenue Breakup (FY18) International Revenue Breakup (FY18)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Domestic EBIT Margin Change International EBIT Margin Change

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Parachute (Rigid pack),

28

VAHO, 20Saffola , 14

International , 22

Others, 16(%)

Bangladesh, 45

MENA, 14

South Africa, 9

South East Asia, 26

Others, 6(%)

Bangladesh non-coconut portfolio (26% mix) grew by 50% in cc terms while PCNO witnessed a flattish quarter (mature market) South East Asia remained muted owing to flattish growth in Vietnam (foods biz declined). Mgt. maintains positive near term outlook MENA region (14% Int. mix) has rebounded strongly in the recent quarters. However, macros continue to be tough. Mgt maintains cautiously optimistic outlook

14.0

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-

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EBIT Margin Change (bps) EBIT Margin (%) -RHS

MARICO : RESULTS REVIEW 1QFY19

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Urban Growth (YoY) Rural Growth (YoY)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Modern Trade Growth (YoY) CSD Growth (YoY)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Rural demand was the bright spark in Marico’s performance Modern trade is now 11% of domestic turnover, and continues to grow in high double digits CSD (7% of domestic turnover) rebounded with 15% growth

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MARICO : RESULTS REVIEW 1QFY19

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Change in Raw Material Prices Change in Product MRP

Note: Jun-18 prices are indexed to 100 Source: Company, HDFC sec Inst Research

Note: Jun-18 prices are indexed to 100 Source: Company, HDFC sec Inst Research

Copra Inflation (YoY %) Gross Margin Change

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Price hikes for Parachute have been steep owing to copra inflation Saffola price cuts are owing to benefits passed on from input tax credit and GST Copra prices are down 19% from their peak in Jan-18. We expect copra deflation to gain pace in 2HFY19

140 142

126 118

112 122

80

100

120

140

160

180

Cochin Coconut

OIL

Copra Calicut

Kardi Oil Jalna

Rice Bran Liquid Paraffin

HDPE

Jun-17 Jun-18

100

122 127

102 96 98 98

80

90

100

110

120

130

PCNO -50 ml

PCNO -100 ml

PCNO -250 ml

Saffola Total

Saffola Tasty

Blend -1ltr

Saffola Gold -

1ltr

Saffola Active -

1ltr

Jun-17 Jun-18

-60%-40%-20%

0%20%40%60%80%

100%120%140%

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MARICO : RESULTS REVIEW 1QFY19

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Assumptions Year to March (Rs mn) FY17 FY18 FY19E FY20E FY21E Revenue Growth (%) Domestic Business (2.1) 9.3 17.5 14.6 13.6

Parachute Coconut (11.6) 22.0 20.3 13.2 14.5 VAHO 6.8 3.5 14.8 14.8 14.8 Saffola Oil 6.1 (4.7) 10.7 12.8 12.3 Youth products 5.0 5.0 16.0 18.0 18.0

IBD (0.5) (0.5) 15.0 14.0 14.0 Gross Margin (%) 52.2 47.0 48.7 49.7 50.4 ASP (% of sales) 11.0 9.3 9.0 9.4 9.5 Distribution (% of sales) 4.0 3.8 4.0 4.0 4.0 EBITDA Margin (%) 19.6 18.0 19.8 21.9 22.3 Tax Rate (%) 29.4 25.9 27.1 26.5 26.5 Source: Company, HDFC sec Inst Research Change in Estimates

FY19E FY20E FY21E

New Old Chg (%) New Old Chg (%) New Old Chg (%) Sales 73,967 73,734 0.3 84,682 84,525 0.2 96,274 95,942 0.3 EBITDA 14,674 14,658 0.1 18,524 18,617 (0.5) 21,514 21,692 (0.8) PAT 10,571 10,677 (1.0) 13,710 13,793 (0.6) 15,986 16,133 (0.9) EPS 8.2 8.3 (1.0) 10.6 10.7 (0.6) 12.4 12.5 (0.9) Source: HDFC sec Inst Research

Management guided for 8-10% volume growth for the domestic business in the medium term and 10-12% cc growth for international business Margin pressure to reduce in 2HFY19 We bake in higher ASP spend in the medium-long term to support new product launches

MARICO : RESULTS REVIEW 1QFY19

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Peer Set Comparison

Company MCap

(Rs bn)

CMP (Rs) Reco. TP

(Rs)

EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)

FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E

HUL 3,808 1,763 NEU 1,709 29.4 35.5 42.7 59.9 49.7 41.3 41.7 35.1 29.6 71.4 73.8 74.4 ITC 3,649 299 BUY 367 10.1 11.1 12.3 29.7 26.9 24.4 18.8 16.6 14.9 37.9 40.1 43.0 GCPL 899 1,320 NR 1,160 26.7 31.3 37.3 49.3 42.2 35.4 37.0 31.5 26.5 20.5 23.2 27.3 Britannia 767 6,392 NEU 6,307 103.2 132.4 158.6 61.9 48.3 40.3 41.5 32.9 27.6 45.7 52.4 56.0 Dabur 770 437 BUY 461 9.6 11.6 13.8 45.7 37.7 31.7 37.7 31.2 26.3 53.0 59.4 66.2 Marico 454 352 BUY 388 8.2 10.6 12.4 43.0 33.1 28.4 31.0 24.5 21.1 46.2 56.7 62.5 Colgate 306 1,123 NEU 1,185 28.7 32.8 37.8 39.1 34.2 29.7 23.9 20.4 17.7 69.6 81.9 96.1 Emami 259 568 BUY 648 14.3 17.2 20.5 39.6 33.1 27.7 28.9 24.4 20.6 29.0 37.7 48.4 Jub. Food 192 1,452 BUY 1,562 25.8 31.8 39.2 56.2 45.6 37.0 30.0 24.9 20.8 56.6 71.9 89.2 Source: HDFC sec Inst Research

MARICO : RESULTS REVIEW 1QFY19

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Income Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Net Revenues 59,178 63,222 73,967 84,682 96,274 Growth (%) (1.7) 6.8 17.0 14.5 13.7 Material Expenses 28,259 33,482 37,957 42,571 47,725 Employee Expense 4,042 4,222 4,647 5,297 5,998 ASP Expense 6,510 5,856 6,640 7,968 9,163 Distribution Expense 2,386 2,408 2,959 3,387 3,851 Other Expenses 6,389 5,877 7,090 6,935 8,023 EBITDA 11,593 11,378 14,674 18,524 21,514 EBITDA Growth (%) 10.3 (1.9) 29.0 26.2 16.1 EBITDA Margin (%) 19.6 18.0 19.8 21.9 22.3 Depreciation 903 891 973 1,061 1,148 EBIT 10,690 10,487 13,700 17,463 20,366 Other Income (Including EO Items) 973 846 1,161 1,486 1,630

Interest 166 162 167 104 45 PBT 11,497 11,171 14,694 18,845 21,950 Total Tax 3,377 2,896 3,988 4,994 5,817 RPAT 134 131 134 141 148 Minority Interest 7,986 8,145 10,571 13,710 15,986 Adjusted PAT 7,986 8,145 10,571 13,710 15,986 APAT Growth (%) 12.3 2.0 29.8 29.7 16.6 Adjusted EPS (Rs) 6.19 6.31 8.19 10.62 12.38 EPS Growth (%) 12.2 2.0 29.8 29.7 16.6

Source: Company, HDFC sec Inst Research

Balance Sheet (Rs mn) FY17 FY18 FY19E FY20E FY21E SOURCES OF FUNDS Share Capital - Equity 1,291 1,291 1,291 1,291 1,291 Reserves 21,966 24,138 26,480 30,465 36,725 Total Shareholders Funds 23,257 25,429 27,771 31,756 38,016 Minority Interest 133 125 123 121 119 Long Term Debt 1,225 1,224 1,024 824 624 Short Term Debt 1,163 1,869 669 469 269 Total Debt 2,388 3,093 1,693 1,293 893 Net Deferred Taxes 125 202 202 202 202 Long Term Provisions & Others 225 192 221 254 292 TOTAL SOURCES OF FUNDS 26,128 29,041 30,010 33,625 39,522 APPLICATION OF FUNDS Net Block 10,847 11,103 11,130 11,319 11,420 CWIP 112 268 268 268 268 LT Loans & Advances 194 190 223 255 290 Other Non Current Assets 437 656 656 656 656 Total Non-current Assets 11,590 12,218 12,277 12,498 12,635 Inventories 12,534 15,109 16,986 18,505 20,979 Debtors 2,470 3,406 3,984 4,488 5,006 Other Current Assets 1,196 2,561 2,996 3,430 3,900 Cash & Equivalents 8,442 7,429 7,303 9,924 14,164 Total Current Assets 24,642 28,505 31,269 36,347 44,049 Creditors 9,540 11,110 12,850 14,396 16,174 Other Current Liabilities & Provns 564 572 686 823 988 Total Current Liabilities 10,104 11,682 13,537 15,219 17,162 Net Current Assets 14,538 16,823 17,733 21,127 26,887 TOTAL APPLICATION OF FUNDS 26,128 29,041 30,010 33,625 39,522

Source: Company, HDFC sec Inst Research

MARICO : RESULTS REVIEW 1QFY19

Page | 11

Cash Flow Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Reported PBT 11,487 11,170 14,694 18,845 21,950 Non-operating & EO Items (53) (329) - - - Interest Expenses (197) (174) 167 104 45 Depreciation 903 891 973 1,061 1,148 Working Capital Change (2,698) (3,065) (2,037) (2,273) (3,020) Tax Paid (2,964) (2,949) (3,988) (4,994) (5,817) OPERATING CASH FLOW ( a ) 6,477 5,544 9,810 12,743 14,308 Capex (815) (1,231) (1,000) (1,250) (1,250) Free Cash Flow (FCF) 5,663 4,313 8,810 11,493 13,058 Investments (441) 1,047 - - - Non-operating Income 340 353 (32) (32) (35) INVESTING CASH FLOW ( b ) (915) 169 (1,032) (1,282) (1,285) Debt Issuance/(Repaid) (670) 692 (1,400) (400) (400) Interest Expenses (172) (162) (167) (104) (45) FCFE 4,720 6,243 7,210 10,956 12,578 Share Capital Issuance 0 0 - - (0) Dividend (5,088) (6,357) (8,229) (9,725) (9,725) Others 190 152 29 33 38 FINANCING CASH FLOW ( c ) (5,740) (5,675) (9,768) (10,197) (10,133) NET CASH FLOW (a+b+c) (177) 38 (990) 1,264 2,890 EO Items, Others 634 397 136 143 150 Closing Cash & Equivalents 2,360 2,001 875 1,996 4,736

Source: Company, HDFC sec Inst Research

Key Ratios FY17 FY18 FY19E FY20E FY21E PROFITABILITY (%) GPM 52.2 47.0 48.7 49.7 50.4 EBITDA Margin 19.6 18.0 19.8 21.9 22.3 EBIT Margin 18.1 16.6 18.5 20.6 21.2 APAT Margin 13.5 12.9 14.3 16.2 16.6 RoE 36.8 33.5 39.7 46.1 45.8 RoIC (or Core RoCE) 49.3 40.6 46.2 56.7 62.5 RoCE 34.2 30.5 36.9 44.1 44.5 EFFICIENCY Tax Rate (%) 29.4 25.9 27.1 26.5 26.5 Fixed Asset Turnover (x) 5.0 4.9 5.3 5.6 5.9 Inventory (days) 77.3 87.2 83.8 79.8 79.5 Debtors (days) 15.2 19.7 19.7 19.3 19.0 Other Current Assets (days) 7.4 14.8 14.8 14.8 14.8 Payables (days) 58.8 64.1 63.4 62.1 61.3 Other Current Liab & Provns (days) 3.5 3.3 3.4 3.5 3.7 Cash Conversion Cycle (days) 37.6 54.2 51.5 48.3 48.2 Net D/E (x) (0.3) (0.2) (0.2) (0.3) (0.3) Interest Coverage (x) 0.0 0.0 0.0 0.0 0.0 PER SHARE DATA (Rs) EPS 6.2 6.3 8.2 10.6 12.4 CEPS 6.9 7.0 8.9 11.4 13.3 Dividend 3.5 4.2 5.5 6.5 6.5 Book Value 18.0 19.7 21.5 24.6 29.4 VALUATION P/E (x) 56.9 55.8 43.0 33.1 28.4 P/BV (x) 19.5 17.9 16.4 14.3 12.0 EV/EBITDA (x) 39.1 40.0 31.0 24.5 21.1 EV/Revenues (x) 7.7 7.2 6.1 5.4 4.7 OCF/EV (%) 1.4 1.2 2.2 2.8 3.2 FCF/EV (%) 1.2 1.3 1.9 2.5 2.9 FCFE/Mkt Cap (%) 1.0 1.4 1.6 2.4 2.8 Dividend Yield (%) 1.0 1.2 1.6 1.8 1.8

Source: Company, HDFC sec Inst Research

MARICO : RESULTS REVIEW 1QFY19

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RECOMMENDATION HISTORY

Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target 3-Aug-17 326 NEU 340 10-Oct-17 314 NEU 343 1-Nov-17 315 NEU 343

13-Nov-17 311 NEU 343 27-Dec-17 318 BUY 370 12-Jan-18 315 BUY 374 13-Feb-18 310 BUY 380 28-Feb-18 312 BUY 380 11-Apr-18 324 BUY 375 3-May-18 312 BUY 376 9-Jul-18 340 BUY 388

4-Aug-18 352 BUY 388

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Marico TP

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