MARICO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.4

Marico demonstrates strong profitability, low debt, and consistent growth, but its high valuation metrics suggest limited upside in the short term. Ideal for long-term holding with selective accumulation on dips.

📊 Financial Overview

• Revenue: ₹11,447 Cr (TTM) — 20% YoY growth in Q4 FY25

  Rediff.com

• Profitability: PAT surged to ₹777 Cr from ₹325 Cr — 150% quarterly growth
• Margins: ROCE at 42.8%, ROE at 36.5% — exceptional capital efficiency
• Debt Profile: Debt-to-equity ratio of 0.06 — nearly debt-free
• EPS: ₹15.5 — supports strong earnings base

📈 Valuation Metrics

• P/E Ratio: 46.6 — significantly above industry average of 25.8
• P/B Ratio: ~19.6 — reflects premium pricing relative to book value ₹36.8
• PEG Ratio: 4.93 — indicates overvaluation relative to growth
• Intrinsic Value: Estimated around ₹680–₹700 based on normalized earnings and sector multiples

🏢 Business Model & Competitive Edge

• Core Operations: Leading FMCG player in personal care, foods, and wellness
• Moat: Strong brand portfolio including Parachute, Saffola, Livon, and Set Wet
• Growth Drivers: Premiumization, rural penetration, and international expansion

  Rediff.com

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📌 Entry Zone Recommendation

• Suggested Entry: ₹680–₹700 — near intrinsic value and DMA200
• Technical Indicators: RSI at 50.6 (neutral), MACD positive — mild bullish momentum

📈 Long-Term Holding Guidance

• Strong fundamentals, brand equity, and low debt make Marico a reliable long-term hold
• Ideal for conservative investors seeking steady growth and dividend income

✅ Positive

• Exceptional ROCE and ROE
• Debt-free balance sheet
• Strong quarterly profit growth
• Resilient brand portfolio and diversified revenue streams

⚠️ Limitation

• High P/E and PEG ratios
• Premium valuation may limit short-term upside
• DII holding declined by 0.73%

📰 Company Negative News

• Copra and vegetable oil inflation led to price hikes, impacting volume growth

  Rediff.com

🌟 Company Positive News

• Domestic revenue up 23% YoY; food segment grew 44% in Q4 FY25

  Rediff.com

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• International business posted 11% growth (16% in constant currency)

  Rediff.com

🏭 Industry

• FMCG industry P/E at 25.8 — Marico trades at a premium
• Sector driven by consumption growth, premiumization, and rural demand

🧾 Conclusion

• Marico is a fundamentally strong FMCG stock with excellent return metrics and brand strength
• Accumulate on dips for long-term growth; monitor input cost trends and valuation levels

Sources

Value Research

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