Shares of Marico Limited rose 5 per cent to hit an intraday high of Rs 494.75 on BSE after the company posted its earnings for the quarter ended December 2021. FMCG firm Marico Ltd reported a marginal increase of 1.6 per cent in its consolidated net profit to Rs 317 crore for the third quarter ended December 2021. Profit in the year-ago period stood at Rs 312 crore. Revenue from operations jumped 13.43 per cent to Rs 2,407 crore, compared with Rs 2,122 crore in the year-ago period. The stock opened 2.76 per cent higher at Rs 484 against the previous close of Rs 471. With a market capitalisation of more than Rs 62,000 crore, the shares stand higher than 5 day moving averages but lower than 20 day, 50 day, 100 day and 200 day moving averages. According to HDFC Securities, Marico posted steady revenue growth and an in-line margin. The company saw pressures from crude derivatives and edible oil (sequential deceleration), which were partially offset by copra deflation. The brokerage house noted that Marico is taking proactive pricing actions in core brands, which will help drive volume growth in the ensuing quarters. Marico’s thrust to drive both core brands along with new initiatives (D2C, food) will sustain steady volume growth. The gross margin is bottoming out with copra softening. "We model sequential margin improvement from Q4FY22. We maintain our EPS estimates and value Marico at 45x PE on Dec-23E EPS to derive a target price of Rs 580 per share," it added. "We are upgrading Marico to Accumulate (Hold earlier) as the stock offers value at 34.2xFY24 EPS with ROE/ROCE of 44.8/55 per cent and 80 per cent dividend payout post ~19 per cent correction from the peak. 3Q volumes disappointed a bit on soft rural demand and lower Saffola sales on increased OOH consumption," said Prabhudas Lilladher in a research report. "We believe aby volatility in copra prices and other crude linked inputs remains a key risk given price correction taken by the company in the past few months. We expect Sales/PAT CAGR of 14.3 per cent and 15.2 per cent over FY21-24 and assign a target price of Rs 546 (41xDec23 EPS)," it added. Motilal Oswal noted that the much-needed diversification could lead to higher multiples compared with in the past. Valuations at 41.4x FY23E EPS and 35.3x FY24 EPS appear inexpensive given the promise of strong earnings growth (v/s earlier) and healthy ROEs of over 30 per cent. "There is no material change to our FY22E EPS forecasts following in-line results. However, some amount of deflation impact on realization as well as lower other income forecasts has led to a 3–5 per cent reduction in our FY23E/FY24E EPS. We maintain our target multiple of 45x FY24E EPS to arrive at a target price of Rs 600 per share," the brokerage house added.