Marico Limited (NSE: MARICO)

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172

Q4 22 updates

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Summary

  • GM inching back to 45%
  • Copra price softened, helping minimize RM impact
  • Export strong trajectory continues - double digit constant currency (higher share in mix, higher margins here)
  • New launches under Saffola, D2C brands doing per expectations
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Marico business update and info inflation situation

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Marico

Marico - In D2C troubles

Marico’s volume growth in core products (Parachute, Saffola) has stagnated. They took price cut in Q1 with realization down 7%.

They were banking on D2C acquisitions like Beardo to bring growth. Instead they are now fighting court battles and siphoning of funds.

In a lawsuit filed in the Bombay High Court, Beardo has sued its biggest distributor RHV Enterprise and its directors over unpaid dues of 26 crore which has been siphoned off. It seems that it is Beardo that has played Marico. The Beardo e-commerce growth story was never real. Beardo passed inventory to its distributor and showed glossy e-commerce sales.

Shows D2C may be a hyped plot for now.

Source:
https://the-captable.com/2023/08/marico-beardo-rhv-lawsuit/https://the-captable.com/2023/08/marico-beardo-rhv-lawsuit/

Abhishek Murarka

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In today’s investor call, no one raised question about this lawsuit to management. On the contrary management presented Beardo as a success story and confirmed that Beardo is close to Rs. 150 crore mark in sales and is already profitable. Management sounded very confident on their D2C play. Is there anything we are missing here?

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Any idea, why no dividend was announced this quarter. It means dividend of only Rs3/share for the year, down from Rs4.5 last year.

Any issues with cashflow or some acquisitions?

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I think now is time to relook Marico and Dabur for investment. Recent low growth due to rural consumption pain, these companies are correcting to reasonable valuation for investment.
These companies have both growth engines - mass consumption products (volume growth) and premiumization products (value growth) . Currently, consumption sector is out of favor and PE is gettering de-rated. However, companies’ management is focused on growth and cost optimization-which could be factors for reasonable return in near future (2-3 years) -
These companies really knows Indian consumers’ need and focused on it…including middle east and African countries…I think now its time to do SIP buying!
Disc - started buying on every correction!

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True. Especially Marico seems to be fairly priced at 45x. If you are not aggressive investor it is proxy to debt and can give 8%(including 2% dividend) of returns for many years to come based on a conservative profit CAGR of 10%

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hi, dividend is paid and I have received in my account. But this time they announced dividend after q3 results.

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