Shares of Marico jumped over 6 percent in early trade on Tuesday despite the company posted weak earnings in the fourth quarter of fiscal 2020. The stock touched an intraday high of Rs 301.65 per share, adding 6.06 percent.

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At 10:45 am, the stock was trading 3.57 percent higher at Rs 294.55 on the BSE.

Marico reported a 50.62 percent decline in consolidated net profit at Rs 199 crore in Q4FY20 due to COVID-19 related disruptions. Its net sales dropped 7.02 percent to Rs 1,496 crore, YoY.

EBITDA margin expanded to 18.85 percent during the quarter from 18.27 percent, YoY, due to lower raw material cost, advertising and sales promotion expenses, and lower employee cost.

"Company's margin beat drives a positive earnings surprise. The company expects copra price deflation which improves FY21 margin visibility," global brokerage Jefferies said in a note.

Jefferies maintained a 'buy' call with a target price of Rs 400 per share. The brokerage said that the stock offers attractive risk-reward and remains one of its top picks.

Factoring in higher-margin, the brokerage revised up Marico's FY21 EPS forecast. Current utilization at 75 percent signals a gradual stabilization, Jefferies said.

Credit Suisse expects the company's ad spends are likely to be 100 bps lower in FY21 and overall EBITDA margin to remain flat YoY in FY21.

The broking house maintains Neutral rating and a TP at Rs 295 per share. It cut FY21-22 earnings by 1 percent.

Kotak Institutional Equities said that the Q4 print of the company was decent in context of COVID-led disruption. It continues to find the risk-reward balance attractive.

The brokerage maintained Buy rating with a target at Rs 350 per share and trimmed FY21-22 earnings estimates by 2-4 percent.

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First Published:May 5, 2020 11:10 AM IST