Started looking into Marico after starting an investment in argofood tech.
The conpany’s OPM is becomming so efficient every year on top of that it has 10-15% sales growth.
The compani is becoming so efficent every year from 15% OPM to 20% in last 10 years
Even if there was no sales growth, the efficiency in ROCE it self gives a 20%-25% returns.
This is a buy on dip company for me until India entire food ndustry is organied.
This company would continue tripling every 5 year for atleast a decade more.
Mind you, it is one of most rrecession free company I have seen in 2008 few by 35% and never fell more than 15% otherwise.
With the GST turmoil in air I was contemplating to include some FMCG stocks. In-spite of knowing the data reliability issue, devised the “screener.in” into action with the query fabricated as follows
opm> 15 and sales/Net block >2 and
Debt to equity < 1 and
Return on invested capital> 25 and market capitalization>50 and
price to earning < profit growth 3years +35 and price to earning>30 and
return on equity>35
Marico was my pick from the result set and couldn’t figure out what is the “Other Income” they mentioned which kept on increasing with such a considerable pace?
My request - If anybody has concrete data, please clarify this “Other Income” and related stock data for further checks.
Declarations: Not invested in any FMCG.
21.62% jump in consolidated Net Profit YoY (Rs 315 crore vs Rs 259 crore).
26% rise in EBITDAYoY (Rs 461 crore against Rs 366 crore).
324 bps enhancement in EBITDA margin YoY (21.3% vs 18.1%).
6.85% increase in Operating revenue YoY (Rs 2166 crore vs Rs 2027 crore).
6% volume growth in domestic & constant currency growth of 7% in the international business.
In the traditional channel, growth was led by rural, while the new-age channels of modern trade and e-commerce continued their stellar run.
Company has stepped up A&P spends to support its core and new franchises.
Aims 8-10% volume growth over the medium term.
Expects to grow 20% CAGR over the medium term in its futuristic growth engines comprised of healthy foods, premium hair nourishment and male grooming.
Aims to clock organic broad-based double-digit constant currency growth over the medium term in the International business.
“The company delivered a decent performance in a challenging demand environment for the industry at large. As we hope for a recovery in the overall sentiment towards the second half of the year, we will continue to push for volume driven growth and market share gains. After being constrained during the last two years, margins should see an uptick this year despite higher investments required to support our core franchises as well as fuel the new engines of growth,” said Saugata Gupta, MD & CEO, Marico.
Today I came across this product called " True Roots Botanical Hair Tonic" in a super market. The description says stops new grey hair. ( Apparently this product helps in melanin). I was was pleasantly surprised to see that its from marico. (Its quite common to see so many unknown brands that claim help in grey hair). I think this has a very good potential. 75 ml costs 275 rs. Its already no 1 in the most selling under the category Hair Lotions & Tonics in amazon
I also bought one 75 ml bottle today, mainly because of the trust in the brand. Lets see the results.
Most of the new launches are niche products. It includes the protein drink too as they are an online only trial. Some of them could reach the mainstream distribution and we may have to track them once it reaches to that stage.
Nevertheless happy to see them experimenting.
I think you are talking about Saffola Active Slimming Nutri-Shake. If I were to go by Amazon review then it has pretty average reviews. (See here & here). But as @Uservijay told it is probably still in the trial phase via the eCommerce platform.
Btw, their “Saffola FITTIFY Gourmet” products are having very encouraging reviews on Amazon.
Red Flags
• Account payable is steadily on RISE since 2010
• Inconsistent Accumulated Depreciation
• Receivables and inventory is on rise Thus locking the Capital
• Cash and Cash equivalents are decreasing since 2014 may be compensating as the company as increasing spending on short term investments
• Long term debts have reduced significantly since 2010 (GREEN FLAG)
• Only in 2016-17 Marico had spending on the R & D. If any company is targeting to be world player in selecting field they need to spend more on R&D.
• The major overseas revenue ( total 22 % of revenue come from oversea operation export and subsidiary ) market Bangladesh and African market are maturing and demand is lean .
• They are keeping Provision for income tax on the contrary Deferred income tax and tax payable is on RISE since 2010.
Source
• Data source: Morning star data
• Data type : restated type
• Analyses the data as % , common base and actual numbers
However I found some of the Interesting Legal cases that company fought the incidence of tax on their products and brand protection
• Marico Industries Ltd. vs The State Of Bihar on 11 March, 2005 https://indiankanoon.org/doc/1360943/
• Marico Industries Ltd. vs State Of Karnataka And Ors. on 3 January, 2006 https://indiankanoon.org/doc/770268/
• Battle of Brand and protecting it’s Brand: Marico Limited vs Mr. Mukesh Kumar & Ors. on 27 August, 2018 https://indiankanoon.org/doc/19504407/
Regards
Disc : tracking not invested yet i am not sbi approve analyst This is not buy sell or hold recommendation
Marico’s Cold Pressed Virgin Coconut Oil brand Coco Soul that forayed into the organic variants space with the launch of Cold Pressed Virgin Coconut Oils last year, recently extended the product portfolio with a range of Coconut Spreads under their vegan gourmet food range. The brand has introduced two indulgent flavors in the range – Original and Cacao.
Looks like valuation is reaching 5 year low. Along with ITC, Marico seems to be diverging from the rest of the FMCG pack. Unless market knows something about future which may be unknown to me, slowly the valuation are reaching comfort zone. Attaching screen shots from Screener and Value Research. Disc: taken a tracking position recently and may hike exposure soon.
