Marico reported first quarter results for fiscal year 2015 that were ahead of expectations. Net sales grew 17.4% driven by strong growth in Parachute coconut oil due to price hikes to offset higher input costs. While gross margins contracted due to rising copra prices, savings in other expenses helped limit the decline in operating margins. The company maintained its medium term strategy of doubling revenues in four years.

1. 4 August 2014
1QFY15 Results Update | Sector: Consumer
Marico
Gautam Duggad (Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404
Manish Poddar (Manish.Poddar@MotilalOswal.com); +91 22 3027 8029
BSE SENSEX S&P CNX
CMP: INR257 TP: INR300 Buy25,723 7,684
Bloomberg MRCO IN
Equity Shares (m) 644.9
M.Cap. (INR b) / (USD b) 165.5/2.7
52-Week Range (INR) 269/190
1, 6, 12 Rel. Per (%) 4/-8/-9
Financials & Valuation (INR Million)
Y/E MAR 2015E 2016E 2017E
Net Sales 55,977 65,348 75,450
EBITDA 8,501 9,894 11,413
Adj PAT 5,674 6,601 7,650
Adj.EPS(INR) 8.8 10.3 11.9
Gr. (%) 9.1 16.3 15.9
BV/Sh (INR) 33.9 41.6 50.4
RoE (%) 29.4 27.2 25.8
RoCE (%) 31.0 29.7 28.6
P/E (x) 29.2 25.1 21.6
P/BV (X) 7.6 6.2 5.1
 Marico’s 1QFY15 results were ahead of expectations led by strong value growth in
Parachute on account of aggressive price hikes to pass Copra price inflation.
Consol Net sales grew 17.4% to INR 16.2b (est. INR16.3b). Adjusted for Kaya
demerger, like to like growth in consol revenues stood at 25% (5% volume growth)
while domestic revenues grew 28% (6.5% volume growth).
 Gross margin contracted 640bp YoY to 45% (est. 48%) primarily due to RM
inflation in copra. Savings on account of staff costs (down 240bp YoY to 5.3%),
other expenses (down 290bp YoY to 11.6%) and ad spend (down 90bp YoY to
11.9%) resulted in EBITDA margin contraction of modest 30bp to 16.2% (est.
15.2%). Thus, EBITDA grew 15.8% to INR2.6b (est. INR2.5b). Despite higher tax
rate (up 200bp YoY to 26.3%) PAT grew robust 19.3% YoY to INR1.85b (est. 1.6b);
17% higher vs. our estimates.
 Domestic volumes and revenues grew 6.5% and 28% respectively, led by
Parachute (6% volume and 41% value), Saffola (up 10% and 14%) and Value added
Hair oils (11% and 28%). Marico has taken further 19% price hike in Parachute
with cumulative price hike totaling 33%. Youth business revenues were flat on
account of high base (40% growth in 1Q14).
 International Business posted 16% revenue growth with constant currency
growth of 9.6%. Bangladesh, MENA and South Africa posted 14%, 18% and 9%
growth respectively. International margins expanded ~500bp to 18.2%.
 Con-call takeaways: 1) Medium term strategy-2x revenues in four years. 2) Expect
gradual pick-up in growth in 2H15 led by urban revival. 3) EBITDA margins should
compress in next two quarters due to RM inflation.
 Maintain Buy: We are revising our estimates upwards by 3-5% to factor in 1Q15
beat and lower tax rates (28% vs. 30% earlier). Notwithstanding near term margin
challenges due to Copra inflation, we believe Marico is well placed to capitalize on
the potential urban recovery post elections. We maintain Buy rating on the stock
with a target price of INR300.
Quarterly Performance
Y/E March FY14 FY15E Est. Var.
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 1Q (%)
Domesticorganicvol gr (%) 10.0 4.0 3.0 6.0 6.5
Net Sales 13,797 11,154 11,984 10,698 47,632 16,192 13,161 14,141 12,483 55,977 16,280 -0.5%
YoY Change (%) 8.9 -3.5 3.0 7.3 3.9 17.4 18.0 18.0 16.7 17.5 18.0
COGS 6,710 5,594 6,206 5,597 24,107 8,911 6,975 7,424 6,174 29,484 8,466 5.3%
Gross Profit 7,086 5,560 5,778 5,101 23,525 7,281 6,186 6,717 6,309 26,493 7,814 -6.8%
Gross margin (%) 51.4 49.8 48.2 47.7 49.4 45.0 47.0 47.5 50.5 47.3 48.0
Other Expenditure 4,816 3,905 3,783 3,581 16,085 4,654 4,343 4,426 4,569 17,992 5,340 -12.8%
% to Sales 34.9 35.0 31.6 33.5 33.8 28.7 33.0 31.3 36.6 32.1 32.8
EBITDA 2,270 1,655 1,995 1,520 7,439 2,628 1,843 2,291 1,740 8,501 2,475 6.2%
Margins (%) 16.5 14.8 16.6 14.2 15.6 16.2 14.0 16.2 13.9 15.2 15.2
YoY Change (%) 23.5 11.4 23.6 26.6 16.6 15.8 11.4 14.8 14.5 14.3 9.0
Depreciation 206 168 207 215 796 204 205 217 201 826 244 -16.6%
Interest 121 104 73 68 365 70 98 69 76 314 103 -31.5%
Other Income 167 158 204 151 679 222 190 245 167 823 200 11.2%
PBT 2,109 1,541 1,918 1,388 6,957 2,576 1,729 2,249 1,630 8,184 2,327 10.7%
Tax 512 431 501 281 1,572 678 484 630 499 2,291 698
Rate (%) 24.3 27.9 26.1 20.2 22.6 26.3 28.0 28.0 30.6 28.0 30.0
Minority Interest 44 52 63 28 187 44 57 70 47 219 48
AdjustedPAT 1,553 1,059 1,354 1,080 5,198 1,853 1,188 1,549 1,084 5,674 1,581 17.2%
YoY Change (%) 23.5 23.3 32.3 50.0 34.7 19.3 12.2 14.5 0.4 9.1 1.8
E: MOSL Estimates
(INR Million)
FY15FY14
Investors are advised to refer through disclosures made at the end of the Research Report.

2. 4 August 2014 2
Marico
Sales in-line; Parachute drives value growth
 Consol net sales grew 17.4% to INR16.1b (est. INR16.3b) with an underlying 5%
volume growth. Excluding Kaya (Demerged), like to like revenues grew 25%.
Domestic sales posted 28% growth with an underlying 6.5% volume growth
while International sales grew 16% in reported terms and 9.6% in constant
currency.
 Domestic volumes posted 6.5%, driven by Saffola (up 10%) and Value added
Hair oils (11%) while Parachute posted a moderate 5% growth. Standalone gross
margins contracted 590bp YoY due to sharp 131% YoY inflation in copra prices.
 Rural growth (33%) continued to outperform urban growth (25%) while modern
trade (9% of domestic revenues) registered strong 27% YoY growth.
Saffola posted second consecutive quarter of double digit volume growth; VAHO back in double digits
Volume Growth % 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15
Parachute Rigid 10.0 10.0 13.0 11.0 18.0 9.0 6.0 5.0 4.0 1.0 2.0 10.0 6.0
Saffola 15.0 11.0 15.0 3.3 12.0 6.0 4.0 5.0 10.0 7.0 9.0 11.0 10.0
Hair Oils 32.0 26.0 20.0 17.5 25.0 20.0 30.0 24.0 16.0 15.0 8.0 5.0 11.0
Domestic Business 14.0 14.0 16.0 10.3 16.0 14.0 9.0 8.0 10.0 4.0 3.0 6.0 6.5
Source: Company, MOSL
Financials (Ex Kaya): Like to like consol. revenue growth of 25%
1QFY14 1QFY15 % gr FY13 FY14 % gr
Consolidated
Net Sales 12,930 16,190 25.2 42,480 46,760 10.1
Inc/dec in stock (740) (730) (1.4) 1,240 (450) (136.3)
Raw materials (5,580) (7,860) 40.9 (21,770) (22,420) 3.0
Purchases (300) (320) 6.7 (1,160) (1,110) (4.3)
COGS (6,620) (8,910) (21,690) (23,980)
Staff Cost (730) (850) 16.4 (2,630) (2,850) 8.4
Adv & Sales Promotions (1,700) (1,920) 12.9 (5,710) (5,610) (1.8)
Other Expenditure (1,700) (1,880) 10.6 (6,550) (6,930) 5.8
Total Costs (10,750) (13,560) 26.1 (36,580) (39,370) 7.6
EBITDA 2,180 2,630 20.6 5,900 7,390 25.3
OPM% 16.9% 16.2% 13.9% 15.8%
Other Income 170 220 29.4 560 680 21.4
Depreciation (160) (200) 25.0 (620) (770) 24.2
EBIT 2,190 2,650 21.0 5,840 7,300 25.0
Interest (100) (70) (30.0) (500) (340) (32.0)
PBT 2,090 2,580 23.4 5,340 6,960 30.3
Minority Interest (40) (40) (100) (190)
PBT after Minority Interest 2,050 2,540 23.9 5,240 6,770 29.2
Provision for tax (500) (680) (1,420) (1,900)
Adjusted PAT 1,550 1,860 20.0 3,820 4,870 27.5
Exceptional items (net of tax) 0.0 0 520
PAT (reported) 1,550 1,860 20.0 4,340 4,870 12.2
Source: Company, MOSL

3. 4 August 2014 3
Marico
 Parachute (rigid packs): Parachute posted volume and value growth of 6% and
41%, respectively. Given the rise in copra prices (up 131% YoY and 22% QoQ)
the company has taken 19% price hike in Parachute in Q1FY15 with cumulative
price hike totaling 33% YoY. As expected, Marico is benefitting from inflationary
RM environment in Copra as smaller players cede space unable to cope with
rising working capital requirement (market share increased 30bp YoY to 56%).
Non-rigids portfolio witnessed de-growth in the quarter on account of RM
inflation and company maintaining minimum threshold of margins.
Management has guided for 7-8% volume growth in medium term.
Domestic volumes up 6.5%
Source: MOSL, Company
Parachute volumes growth at 6%
Source: MOSL, Company
Reported sales improved 17.4% in 1Q; LTL sales up 25%
Source: MOSL, Company
Coconut oils market share improved 30bp YoY
Source: MOSL, Company
 Saffola reported 10% volume (second consecutive quarter of double digit
volume growth) and 14% value growth in 1Q15 and witnessed a share decline of
300bp YoY to 55% for 12 months ending June’14. RM dynamics for Saffola was
relatively favorable with 24% YoY decline in Kardi Oil and 12% inflation in Rice
Bran. Saffola Oats market share stood at 17% and company has launched two
near flavors – Sweet with Fruits- to add to the existing six savory flavors (51%
share in flavored oats).
16 15 15
5
14 14 13
17 16
10 9 8
10
4 3
6 6.5
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Domestic Volume growth (%)
14
10
5 5
10 10
13
11
18
9
6 5 4
1 2
10
6
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Parachute Volume growth (%)
10,414
9,674
10,500
9,094
12,672
11,559
11,640
9,973
13,797
11,154
11,984
10,698
16,192
31.8
24.7
28.4
21.7 21.7 19.5
10.9 9.7
8.9
-3.5
3.0
7.3
17.4
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sales (INR m) Sales Growth (%)
53.1
53.3
53.9
55.2
54.9
57.2
58.0
57.6
55.7
56.0
56.0
56.0
56.0
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
Coconut Oils (%)

4. 4 August 2014 4
Marico
100bp share gain YoY in VAHO to 28%
Source: MOSL, Company
Saffola shares declined 300bp YoY to 55%
Source: MOSL, Company
 Value-added hair oils recovered and posted double digit volume growth after
two quarters (11% volume and 28% value growth).
- Marico continues to grow faster than the market and has gained 100bp
market share in the VAHO category. The company’s VAHO portfolio now has
four brands with sales of more than INR2b each.
- Nihar Shanti Amla gained 300bp in share to 30% of the Amla sub-category.
 Skin Care & Youth portfolio
- Summer variant of Body Lotions (category size of INR9.5b with below 20%
penetration level) posted healthy growth with Parachute Advansed Body
Lotion having a 6% market share.
- Youth portfolio posted flat performance on account of high base (40%
growth). Set Wet gels and Livon serums gained market share while
Deodorants portfolio (Set Wet and Zatak) maintained shares at 5% during
1Q15. The management expects to get back to 15-20% revenue growth in
couple of quarters.
EBIDTA margin contracted 30bp; gross margins down sharp 640bp
 Gross margin contracted 640bp YoY to 45% (est. 48%) primarily due to RM
inflation in copra. We believe Marico benefitted from relatively lower
consumption costs in 1Q15 due to low cost inventories. Management, during
conference call highlighted the pressure on RM front and hence a possibility of
margin compression in next two quarts.
 Savings on account of staff costs (down 240bp YoY to 5.3%), other expenses
(down 290bp YoY to 11.6%) and ad spend (down 90bp YoY to 11.9%) resulted in
EBITDA margin contraction of modest 30bp to 16.2% (est. 15.2%). Thus, EBITDA
grew 15.8% to INR2.6b (est. INR2.5b). Management has guided for domestic
EBITDA margins in 17-18% band as it strives to drive volume growth while
maintaining margins in a band.
 For the quarter depreciation was lower by 1.1%, interest cost declined 41.8%
YoY and other income grew 33% YoY. This drove 24.7% YoY PBT growth to
INR2.57b.
 Despite higher tax rate (up 200bp YoY to 26.3%) PAT grew robust 19.3% YoY to
INR1.85b (est. 1.6b), 17% higher vs. our estimates.
23.3
23.4
23.7
24.2
24.8
25.3
26.0
27.0
27.0
28.0
28.0
28.0
28.0
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
Value added Hair Oils (%)
53.3
54.8
57.4
58.2
58.4
58.6
58.0
58.0
57.1
57.0
57.0
55.0
55.0
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
Saffola (%)

5. 4 August 2014 5
Marico
Recurr EBITDA margins contracted 30bp YoY
Source: Company, MOSL
Sharp 640bp gross margin decline due to Copra price inflation
Source: Company, MOSL
Raw material price Index (April, 2010 as base)
Source: MOSL, Company
International Business: Sharp 500bp EBITDA margin expansion
 IBD revenues posted 16% YoY revenue growth, with an underlying constant
currency growth of 9.6%. However key highlight of IBD in 1Q15 was a sharp
~500bp operating margin expansion to 18.2% driven by better scale and cost
control.
 Bangladesh posted 14% constant currency sales growth on the back of 5%
volume growth. The company witnessed market share gains across categories.
Management expects revenues for the region to grow at double digits over the
next 3-5 years.
 Middle East and North Africa (MENA) grew by 18% YoY (constant currency) on
the back of strong recovery in the Middle East business.
 Vietnam (South East Asia) sales were flat given the reduced consumer
confidence due to macro slowdown. The management has guided for subdued
performance from this region in the near term.
 South Africa grew by 9% (constant currency) despite tough macro conditions.
 For International division, Marico expects to achieve 15-20% constant currency
organic revenue growth with operating margins in the range of 14-15%, in the
medium term.
0
5
10
15
20
40
45
50
55
60
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
Gross margins (%) EBITDA margins (%)
6,727
5,976
5,418
4,716
4,140
4,093
4,147
4,626
4,493
5,299
7,397
8,508.0
10357
42.8 44.6 47.8
52.0
48.9
51.2 52.0
55.8
51.4 49.8
48.2 47.7
45.0
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
Copra Prices (INR) Gross Margin (%)
0
50
100
150
200
250
300
350
Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14
Copra Calicut Sun flower Oil bonbay Kardi Oil Jalna Rice Bran

6. 4 August 2014 6
Marico
Segmental details
Sales FY12 1QFY13 2QFY13 3QFY13 4QFY13 FY13 1QFY14 2QFY14 3QFY14 4QFY14 FY14 1QFY15
Domestic 27,659 9,342 7,927 8,282 6,975 32,526 10,008 8,040 9,020 8,120 35,188 12,800
International 9,355 2,555 2,753 2,610 2,158 10,076 2,948 3,140 2,990 2,600 11,678 3,430
Skin Care 2,783 806 915 785 853 3,360 868 NA NA NA 868 NA
Total 39,797 12,703 11,595 11,678 9,986 45,962 13,824 11,180 12,010 10,720 47,734 16,230
EBIT
Domestic 4,443 1,851 1,248 1,449 1,265 5,812 2,014 1,360 1,600 1,300 6,274 2,320
International 799 171 219 229 34 664 321 450 460 360 1,591 550
Skin Care (291) (73) 57 39 (16) 8 31 NA NA NA 31 NA
Total 4,951 1,949 1,524 1,717 1,282 6,484 2,366 1,810 2,060 1,660 7,896 2,870
EBIT margins
Domestic EBIT margins 16.1% 19.8% 15.7% 17.5% 18.1% 17.9% 20.1% 16.9% 17.7% 16.0% 17.8% 18.1%
International EBIT
margins
8.5% 6.7% 8.0% 8.8% 1.6% 6.6% 10.9% 14.3% 15.4% 13.8% 13.6% 16.0%
Skin Care -10.4% -9.0% 6.2% 5.0% -1.9% 0.2% 3.5% NA NA NA 3.5% NA
Total 12.4% 15.3% 13.1% 14.7% 12.8% 14.1% 17.1% 16.2% 17.2% 15.5% 16.5%
Capital employed
Domestic 6,087 13,645 13,672 13,458 15,309 15,309 7,549 7,030 6,570 7,440 28,589 7,920
International 5,950 5,818 5,385 5,214 4,853 4,853 5,036 4,680 44,720 4,470 58,906 5,680
Skin Care 1,924 1,743 1,787 1,895 1,416 1,416 1,620 NA NA NA 1,620 NA
Unallocated (2,530) (3,726) (2,828) (1,551) (1,762) (1,762) (532) NA NA NA -532 NA
Total 11,430 17,480 18,016 19,016 19,815 19,815 13,673 11,710 51,290 11,910 88,583 13,600
ROCE
Domestic 73.0% 13.6% 9.1% 10.8% 8.3% 38.0% 26.7% 19.3% 24.4% 17.5% 21.9% 29.3%
International 13.4% 2.9% 4.1% 4.4% 0.7% 13.7% 6.4% 9.6% 1.0% 8.1% 2.7% 9.7%
Skin Care -15.1% -4.2% 3.2% 2.1% -1.1% 0.5% 1.9% NA NA NA 1.9% NA
Total 43.3% 11.1% 8.5% 9.0% 6.5% 32.7% 17.3% 15.5% 4.0% 13.9% 8.9% 21.1%
Source: Company, MOSL
Conference Call Highlights
 Some issues with internal and Nielson reported data as far as category growth
rates are concerned.
 Expect gradual pick-up in growth- likely in 3Q and 4Q. Monitoring the progress
of monsoon.
 Expect urban consumption to pick up in 2H. As of now Rural has outgrown
Urban for Marico.
 Medium term strategy: to double turnover in 4 years.
 Value Added Hair Oils: Growth has been broad-based across brands and not
just driven by Shanti Amla.
 International margins: Up ~500bp YoY. Will use the margin gains to invest
behind brands and build deeper presence in existing emerging markets.
 Net contribution margins of Value Added Hair Oils have gone up in the past two-
three years.
 Price hikes in Bangladesh have been < India. Expect double digit constant
currency value growth in Bangladesh over next three years.
 Hair Colors: As per management, Livon’s performance so far has been
satisfactory with good performance in some markets but yet to pick up across
geographies.
 EBITDA margins should compress in next two quarters due to RM inflation.
Current quarter margins had benefit of somewhat lower consumption costs.

7. 4 August 2014 7
Marico
 Prefer margins to remain in a band {targets absolute EBITDA/ unit)
Valuation & view
 We have revised our estimates upwards by 3-5% to incorporate 1Q15 beat and
marginally lower tax rates vs. earlier assumption (28% vs. 30%).
 1Q15 performance demonstrates Marico’s strong pricing power in its core
portfolio with mid single volume growth in Parachute’s rigid portfolio despite
aggressive 33% price hikes.
 Notwithstanding near term margin challenges due to Copra inflation, we believe
Marico is well placed to capitalize on the potential urban recovery post
elections. We maintain Buy rating on the stock with a target price of INR300.
 Delay in urban consumption pick up is the key risk.
Revise estimates up 3-5% over FY15-17E
Old New Change
FY FY15E FY16E FY17E FY15E FY16E FY17E FY15E FY16E FY17E
Sales 55,176 64,332 74,079 55,977 65,348 75,450 1.5% 1.6% 1.9%
EBITDA 8,390 9,772 11,144 8,501 9,894 11,413 1.3% 1.2% 2.4%
PAT 5,398 6,384 7,304 5,674 6,601 7,650 5.1% 3.4% 4.7%
Source: Company, MOSL

8. 4 August 2014 8
Marico
Story in charts
Volume growth in domestic portfolio
Source: Company, MOSL
Category leadership (value market shares)
Source: Company, MOSL
Revenue CAGR of 16.4% over FY14-FY17E
Source: Company, MOSL
Margin decline owing to RM inflation
Source: Company, MOSL
22% PAT growth in 1QFY15
Source: Company, MOSL
Return rations stable
Source: Company, MOSL
11
9 10 10 11 9.5
4.3
22
11
16 16
11
6.8
9.3
16 17 16
24 24 24.8
11
FY08 FY09 FY10 FY11 FY12 FY13 FY14
Parachute Saffola Value added Hair Oil
10.0
20.0
30.0
40.0
50.0
60.0
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
Coconut Oils (%) Saffola (%) Value added Hair Oils (%)
26,608
31,283
39,682
45,843
47,632
55,977
65,348
75,450
14.1
13.1
11.9
13.4
15.6 15.2 15.1 15.1
FY10E FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Revenues (INR m) EBITDA Margins (%)
51.1
46.7 46.7
51.8
49.4
48.1 48.5 48.7
FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
Gross Margin (%)
850
783
881
714
1,258
859
1,023
720
1,553
1,059
1,354
1,080
1,897
15.3
9.4
26.7
-0.3
48.0
9.7
16.1
0.8
23.523.3
32.3
50.0
22.2
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
PAT (INR m) PAT Growth (%)
36.9
25.9 28.0
19.6
26.7
29.4
27.2 25.8
FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E
RoE trend (%)

9. 4 August 2014 9
Marico
Marico: an investment profile
Company description
Marico (MRCO) has emerged as a dominant player in
the hair care and edible oil segments. It has also made
inroads to international markets. Its entry into skin care
clinics reaffirms the management's focus on wellness.
Key investment arguments
 We are positive on MRCO's long-term growth
strategy, its successful overseas forays and its new
product development for the domestic markets.
 The company has been able to leverage its existing
brands by entering into new categories.
 International operations are gaining traction due to
acquisition of Fiancee and Hair Code brands in Egypt
and entry into South Africa.
Key investment risks
 Volume growth could decline, with the inflationary
environment pressurizing consumer wallets.
 Copra price fluctuation poses a risk to profitability
in the core business of pure coconut oil, despite
change in the company's pricing policy and its
improved pricing power.
Recent developments
 Kaya has been de-merged from MRCO into a
separate entity - Marico Kaya Enterprises Limited
(MAKE), as part of restructuring of the Marico
group (effective 1st April 2013).
 Price hike of 19% in Parachute portfolio on a
weighted average basis (June 2014)
Valuation and view
 We expect Parachute volumes to recover in FY15.
Price hike in Parachute should drive revenue
growth ahead. Management has maintained its
guidance of 13-14% for International business v/s
8% recorded in FY13. We maintain a Buy rating on
the stock with an unchanged TP of INR300.
Sector view
 We have a cautious view on the sector, given the
slower income growth in the economy, which
might impact volumes as well as profit margins of
companies.
 Companies with low competitive pressures and
broad product portfolios will be able to better
withstand any slowdown in a particular segment.
 Longer term prospects appear bright, given
consumption trend and strengthening rural
market.
Comparative valuations
Marico GCPL Dabur
P/E (x) FY15E 29.2 32.4 31.8
FY16E 25.1 26.4 27.0
P/BV (x) FY15E 7.6 7.2 10.7
FY16E 6.2 6.2 8.9
EV/Sales (x) FY15E 3.0 3.5 4.1
FY16E 2.6 2.9 3.5
EV/EBITDA (x) FY15E 19.8 22.3 24.9
FY16E 17.0 18.6 21.2
EPS: MOSL forecast v/s consensus (INR)
MOSL Consensus Variation
Forecast Forecast (%)
FY15 8.8 8.6 2.4
FY16 10.3 10.2 1.2
Target price and recommendation
Current Target Upside Reco.
Price (INR) Price (INR) (%)
257 300 16.7 Buy
Shareholding pattern (%)
Jun-14 Mar-14 Jun-13
Promoter 59.7 59.7 59.7
DII 6.2 6.0 5.2
FII 28.1 27.6 28.0
Others 6.0 6.7 7.1
Note: FII Includes depository receipts
Stock performance (1-year)

10. 4 August 2014 10
Marico
Financials and valuations
Income statement (INR Million)
Y/E Mar 2014 2015E 2016E 2017E
Net Sales 47,632 55,977 65,348 75,450
Change (%) 3.9 17.5 16.7 15.5
EBITDA 7,439 8,501 9,894 11,413
EBITDA Margin (%) 15.6 15.2 15.1 15.1
Depreciation 796 826 945 1,138
EBIT 6,643 7,675 8,949 10,275
Interest 365 314 269 217
Other Income 679 823 956 1,089
Extraordinary items 0 0 0 0
PBT 6,957 8,184 9,636 11,147
Tax 1,572 2,291 2,794 3,233
Tax Rate (%) 22.6 28.0 29.0 29.0
Reported PAT 4,853 5,674 6,601 7,650
Adjusted PAT 5,198 5,674 6,601 7,650
Change (%) 34.7 9.1 16.3 15.9
Min. Int. & Assoc. Share -187 -219 -241 -265
Adj Cons PAT 4,666 5,455 6,360 7,386
Balance sheet (INR Million)
Y/E Mar 2014 2015E 2016E 2017E
Share Capital 644 644 644 644
Reserves 16,103 21,174 26,118 31,809
Net Worth 16,747 21,818 26,762 32,453
Debt 5,426 5,784 6,151 6,535
Deferred Tax -185 -146 -92 -24
Total Capital Employed 21,987 27,456 32,820 38,964
Gross Fixed Assets 9,777 11,077 12,677 14,477
Less: Acc Depreciation -5,723 -6,550 -7,494 -8,632
Net Fixed Assets 4,054 4,528 5,183 5,845
Capital WIP 1,500 1,500 1,500 1,500
Investments 4,846 9,853 13,818 18,149
Current Assets 14,477 16,031 18,813 21,725
Inventory 7,867 9,236 11,109 12,826
Debtors 2,193 2,575 3,137 3,622
Cash & Bank 2,155 1,812 1,997 2,531
Loans & Adv, Others 2,261 2,409 2,570 2,746
Curr Liabs & Provns 8,180 9,651 11,593 13,260
Curr. Liabilities 7,054 8,309 9,010 10,209
Provisions 1,127 1,342 2,584 3,051
Net Current Assets 6,296 6,380 7,219 8,465
Total Assets 21,987 27,456 32,820 38,964
E: MOSL Estimates
Ratios
Y/E Mar 2014 2015E 2016E 2017E
Basic (INR)
EPS 8.1 8.8 10.3 11.9
Cash EPS 8.5 9.8 11.3 13.2
Book Value 26.0 33.9 41.6 50.4
DPS 0.8 0.8 2.2 2.6
Payout (incl. Div. Tax.) 12.1 11.0 9.5 22.4
Valuation(x)
P/E 31.8 29.2 25.1 21.6
Cash P/E 30.3 26.3 22.7 19.4
Price / Book Value 9.9 7.6 6.2 5.1
EV/Sales 3.5 3.0 2.6 2.2
EV/EBITDA 22.5 19.8 17.0 14.8
Dividend Yield (%) 0.3 0.3 0.9 1.0
Profitability Ratios (%)
RoE 26.7 29.4 27.2 25.8
RoCE 27.9 31.0 29.7 28.6
Turnover Ratios (%)
Asset Turnover (x) 2.0 2.3 2.2 2.1
Debtors (No. of Days) 16.8 16.8 17.5 17.5
Inventory (No. of Days) 60.3 60.2 62.1 62.1
Leverage Ratios (%)
Net Debt/Equity (x) 0.3 0.3 0.2 0.2
Cash flow statement (INR Million)
Y/E Mar 2014 2015E 2016E 2017E
OP/(Loss) before Tax 8,236 9,327 10,838 12,550
Depreciation -796 -826 -945 -1,138
Interest 314 509 687 872
Direct Taxes Paid 1,572 2,210 2,698 3,121
(Inc)/Dec in Wkg Cap 681 -428 -654 -712
CF from Op. Activity 10,007 10,792 12,625 14,695
(Inc)/Dec in FA & CWIP 6,033 -1,205 -1,505 -1,705
(Pur)/Sale of Invt -2,930 -5,006 -3,965 -4,332
CF from Inv. Activity 3,102 -6,211 -5,470 -6,036
Inc / (Dec) in Debt -781 358 367 384
Divd Paid (incl Tax) -603 -603 -1,657 -1,958
CF from Fin. Activity -12,219 -4,924 -6,970 -8,125
Inc/(Dec) in Cash 890 -343 185 534
Add: Opening Balance 1,265 2,155 1,812 1,997
Closing Balance 2,155 1,812 1,997 2,531

11. 4 August 2014 11
Marico
N O T E S

12. 4 August 2014 12
Marico
Disclosures
This research report has been prepared by MOSt to provide information about the company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its affiliated company(ies). This
report is for personal information of the select recipient and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or inducement to
invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been
furnished to you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into
account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable
for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and
investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business
relationships with a significant percentage of the companies covered by our Research Department Our research professionals provide important input into our investment banking and other business selection
processes. Investors should assume that MOSt and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that
the research professionals who were involved in preparing this material may participate in the solicitation of such business. The research professionals responsible for the preparation of this document may
interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and interpreting market information. Our research professionals are paid in part based on the
profitability of MOSt which include earnings from investment banking and other business. MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from
maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt generally prohibits its analysts and persons reporting to analysts from serving as an
officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading
strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with
the recommendations expressed herein. In reviewing these materials, you should be aware that any or all o the foregoing, among other things, may give rise to real or potential conflicts of interest . MOSt and
its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in
any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or
lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to
hold MOSt or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The
information contained herein is based on publicly available data or other sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the
data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not
intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we would endeavor to update the information herein on reasonable basis, MOSt
and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt and/or its affiliates from doing so. MOSt or any of its
affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. MOSt or any of
its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of
merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its
contents.
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency, MOSt has incorporated a Disclosure of
Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Disclosure of Interest Statement MARICO LTD
 Analyst ownership of the stock No
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or
will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible
for preparation of MOSt research receive compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For U.K.
This report is intended for distribution only to persons having professional experience in matters relating to investments as described in Article 19 of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (referred to as "investment professionals"). This document must not be acted on or relied on by persons who are not investment professionals. Any investment or investment activity to
which this document relates is only available to investment professionals and will be engaged in only with such persons.
For U.S.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States.
In addition MOSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state
laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein
are not available to or intended for U.S. persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major
institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as
amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has
entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be
executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer,
MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research
analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors
Regulations and is a subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore
to accredited investors, as defined in the Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Anosh Koppikar Kadambari Balachandran
Email:anosh.Koppikar@motilaloswal.com Email : kadambari.balachandran@motilaloswal.com
Contact(+65)68189232 Contact: (+65) 68189233 / 65249115
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
Motilal Oswal Securities Ltd
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com