Marico Shares Relative Valuation and Peer Comparison

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The company will be evaluated considering a group of 5 peer companies according to the market classifications. Marico shares relative valuation will be done using our 5-10-5 -star rating methodology (5 companies, 10 parameters, Out of 5 stars). From this, we will arrive at a combined peer rating for the company. Companies considered in this analysis are as follows.

  1. Marico
  2. Godrej Consumer
  3. Dabur India
  4. Emami
  5. Jyothy Labs



About the Company:

Marico Ltd was established in 1990 and today it’s one of India’s leading consumer products companies operating in the beauty and wellness space. The company operates in multiple brand categories of hair care, skin care, edible oils, health foods, male grooming and fabric care. The company has a workforce of 2350+ employees along with a 50% gender diversity. Marico has a presence in 25+ countries and a reach to 185+ Million households across the world.

The company operates in the FMCG space where market dominance is achieved by distribution and branding. Its brands have a direct reach at 9+ lakh outlets in India. Marico owns the Parachute brand and is the world’s largest coconut oil manufacturer. The other popular domestic brands include Saffola, Hair & Care, Nihar, Livon, Set Wet, Mediker and Revive. These brands combined have a sales volume of 160+ Million per month. Marico touches 1 in every 3 lives in India.

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Read More Here: Marico Fundamental Analysis and Future Outlook

Get the Excel Dashboard used for this analysis from below:

Dabur Shares Relative Valuation and Peer Comparison
1. Market Capitalization (★ ★ ★ ☆ ☆)

Market capitalization is calculated by multiplying the total number of a company’s outstanding shares by the current market price of one share. Out of the 5 peer companies, Marico has the average market capitalization followed by Godrej Emami and Jyothy Labs. This shows the Third-highest Enterprise Value amongst the peers. Therefore this category gets 3 stars in Marico shares relative valuation.



Dabur Shares Relative Valuation and Peer Comparison
2. Price/Earnings Ratio (★ )

The price-earnings ratio is the ratio of a company’s share price to the company’s earnings per share. The ratio is used for valuing companies and to find out whether they are overvalued or undervalued. P/E higher than Industry average means Overvalued and Lower than Industry average means Undervalued. Marico shares have the second-lowest P/E and it’s below the industry average, so its shares are undervalued. Therefore this category gets 4 stars in Marico shares relative valuation.

3. Price/Book Value Ratio (★ ☆ ☆ ☆ ☆)

The price-to-book ratio is a financial ratio used to compare a company’s current market price to its book value. Lower than average P/B shows undervalued and higher P/B shows overvalued. Marico shares have the highest P/B amongst the competitors. Therefore this category gets 1 stars in Marico shares relative valuation.



Dabur Shares Relative Valuation and Peer Comparison
5.Price/Sales Ratio (★ )

The price-to-sales ratio calculated by taking a company’s market capitalization (the number of outstanding shares multiplied by the share price) and divide it by the company’s total sales or revenue over the past 12 months. The lower the P/S ratio, the more attractive the investment. Marico has the third-highest P/S ratio amongst the competitors which makes its shares undervalued. Therefore this category gets 3 stars in Marico shares relative valuation.

Dabur Shares Relative Valuation and Peer Comparison

6.ROCE (★ ★ ★ ★ )

ROCE is a financial ratio that determines a company’s profitability and the efficiency of capital use. A higher ROCE implies a more economical use of capital and above-average ROCE is considered a good investment. Marico has the highest ROCE amongst its competitors and it is also way above the average line. Therefore this category gets 5 stars in Marico shares relative valuation.

7. Return on Assets (★ ★ ★ ★ )

The return on assets shows the percentage of how profitable a company’s assets are in generating revenue. Higher the ROA better is the asset utilization by the company and higher the efficiency. Marico has the highest ROA amongst its competitors and it is also above the average line. Therefore this category gets 5 stars in Marico shares relative valuation.

Dabur Shares Relative Valuation and Peer Comparison
8. Price/ FCF Ratio (★ )

This is calculated by dividing market capitalization by free cash flow of the company. A lower value for price to free cash flow indicates that the company is undervalued and its stock is relatively cheap. Marico has the second-highest Price/FCF ratio amongst its peers and its way above the Industry average line. This shows that Marico shares are overvalued on this parameter. Therefore this category gets 2 stars in Marico shares relative valuation.

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9. Earnings Per Share (★ ★ ★ )

Earnings per share (EPS) is a company’s net profit divided by the number of common shares it has outstanding. EPS indicates how much money a company makes for each share of its stock, and is a widely used metric to estimate corporate value. Higher the EPS higher is profitability. Marico is in the 2nd position with EPS almost equal to the industry average. Therefore this category gets 4 stars in Marico shares relative valuation.

10.Return on Equity (★ ★ ★ ★ )

Return on equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders’ equity. ROE is considered a measure of how effectively management is using a company’s assets to create profits. Marico has the highest ROE amongst the Peers and its also way above the industry average. Therefore this category gets 5 stars in Marico shares relative valuation.

The overall rating is arrived by taking the average of the above 10 parameter ratings and rounded up if it is above 0.5 and rounded down if it is below 0.5. The stock is undervalued if the rating is above 3 (i.e 4 or 5 stars), it is fairly valued if the rating is around 3 and is overvalued if the rating is below 3 (i.e 2 or 1 star). The ratings are exclusive to each company so more than one company can have the same ratings within the peer group.

Overall Relative Rating:

MARICO SHARES (3.6/5)

This means the stock is Under-Valued at the current price levels.

★ ★ ★

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Relative Valuation Summary
Market Capitalization ★ ★ ★ ☆ ☆
Price/ Earnings Ratio ★ ★ ★ ★ ☆
Price/ Book Value Ratio ★ ☆ ☆ ☆ ☆
Dividend Yield ★ ★ ★ ★ ☆
Price to Sales ★ ★ ★ ☆ ☆
ROCE ★ ★ ★ ★ ★
ROA ★ ★ ★ ★ ★
Price/ Cashflow ★ ★ ☆ ☆ ☆
Earnings Per Share ★ ★ ★ ★ ☆
ROE ★ ★ ★ ★ ★
Overall Peer Rating ★ ★ ★ ★ ☆
Marico Shares Relative Valuation and Peer Comparison

You can read more about the company on its website!
Investor Presentation.
For fundamental analysis of other listed companies click HERE!
For more Relative Valuation Ratings Click HERE!

Sources: Wiki, Investopedia

(Note: All the research done by me is only for educational purposes and should not be seen as Investment recommendations. I am a Research analyst and not a SEBI registered Investment Advisor. My research completely reflects my personal opinions and not of my employers. Kindly do your own due diligence before Investing)



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