MARICO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.7
| Stock Code | MARICO | Market Cap | 94,886 Cr. | Current Price | 729 ₹ | High / Low | 780 ₹ |
| Stock P/E | 49.0 | Book Value | 39.0 ₹ | Dividend Yield | 1.44 % | ROCE | 42.8 % |
| ROE | 36.5 % | Face Value | 1.00 ₹ | DMA 50 | 740 ₹ | DMA 200 | 716 ₹ |
| Chg in FII Hold | -0.19 % | Chg in DII Hold | 0.35 % | PAT Qtr | 441 Cr. | PAT Prev Qtr | 395 Cr. |
| RSI | 44.5 | MACD | -5.12 | Volume | 32,07,290 | Avg Vol 1Wk | 30,46,912 |
| Low price | 578 ₹ | High price | 780 ₹ | PEG Ratio | 5.18 | Debt to equity | 0.04 |
| 52w Index | 74.9 % | Qtr Profit Var | 19.5 % | EPS | 14.9 ₹ | Industry PE | 23.2 |
📊 Analysis: Marico trades at ₹729 with a P/E of 49.0, significantly higher than the industry average of 23.2, indicating overvaluation. ROE (36.5%) and ROCE (42.8%) are excellent, reflecting strong efficiency in generating returns. Dividend yield at 1.44% provides modest income support. The PEG ratio (5.18) suggests expensive valuation relative to growth. Technical indicators (RSI 44.5, MACD -5.12) show neutral-to-bearish momentum. PAT has improved sequentially (395 Cr. → 441 Cr.), highlighting earnings growth. Debt-to-equity at 0.04 indicates a virtually debt-free balance sheet, adding financial stability.
💡 Entry Price Zone: Ideal entry would be between ₹690–₹710, closer to the DMA 200 (₹716), offering better valuation comfort and risk-reward balance.
📈 Exit / Holding Strategy: If already holding, Marico is a fair candidate for long-term investment (3–5 years) given strong ROE and ROCE. Exit strategy should be considered if price sustains below ₹680 or if profitability metrics weaken. Otherwise, continue holding for compounding returns and dividend income.
✅ Positive
- Strong ROE (36.5%) and ROCE (42.8%).
- Dividend yield at 1.44%, attractive for income investors.
- Sequential PAT growth (395 Cr. → 441 Cr.).
- Debt-to-equity ratio at 0.04, virtually debt-free.
⚠️ Limitation
- High P/E (49.0) vs industry average (23.2), indicating overvaluation.
- PEG ratio (5.18) suggests expensive valuation relative to growth.
- Book value at ₹39 is low compared to current price.
📉 Company Negative News
- FII holdings reduced (-0.19%), showing declining foreign investor interest.
- Stock trading below DMA 50 (₹740), reflecting short-term weakness.
📈 Company Positive News
- DII holdings increased (+0.35%), showing domestic institutional confidence.
- Quarterly profit growth of 19.5% variation.
- EPS at ₹14.9, reflecting steady earnings power.
🏭 Industry
- FMCG sector has long-term growth potential driven by consumer demand and brand strength.
- Industry P/E at 23.2 highlights Marico is trading at a steep premium compared to peers.
🔎 Conclusion
Marico is fundamentally strong with high ROE, ROCE, and steady earnings growth, but trades at a steep premium. It is a fair candidate for long-term investment if accumulated near ₹690–₹710. Existing holders should continue holding for 3–5 years unless fundamentals weaken or price drops below ₹680.