Shares of FMCG major Marico Ltd surged six percent on Tuesday to trade at their highest level in 52 weeks after brokerage firm ICICI Securities issued a bullish view on the company.

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ICICI Securities upgraded Marico to ‘buy’ from ‘add’, while raising the target price on the stock to Rs 670 from Rs 610 earlier. This implies an upside of over 19 percent from the stock’s previous close of Rs 561.50 apiece on BSE on Friday. Notably, the stock markets were closed for trading on Monday.

ICICI Securities said that Marico’s revenue/earnings before interest, taxes, depreciation, and amortization (EBITDA)/ profit after tax (PAT) are estimated to witness a compounded annual growth rate (CAGR) of 9/16/16 percent over fiscal year 2023-25.

Securities observed that during a meeting with the management, the company told the brokerage firm that it has medium-term volume growth aspirations of around eight percent.

The ambition to grow faster on a larger base is a positive indication, said the brokerage firm.

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It added that for the company’s Parachute Coconut Hair Oil brand, stability in copra price and revival in rural consumption are likely to aid volume growth.

The competitive intensity at the bottom of the pyramid has also normalised, auguring well for Marico, said ICICI Securities. It added that incremental thrust on premiumisation may now help value growth in the Value-Added Hair Oils segment.

Marico’s edible oil brand Saffola is estimated to hold threshold margins while maintaining stable growth. Meanwhile, revenue from the food segment is expected to be more than that of the edible oil business over the medium term, said ICICI Securities.

After ICICI Securities’ upgrade, the Marico stock jumped as much as six percent in intra-day trade on Tuesday to hit a 52-week high of Rs 595 on BSE. The stock has jumped around 20 percent in the last six months compared with a 10.5 percent rise in the benchmark Sensex during the same period.

Shares of Marico Ltd were trading 3.83 percent higher at Rs 583 apiece on BSE at 10:02 AM.

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(Edited by : Asmita Pant)

First Published:Oct 3, 2023 10:47 AM IST