Reviews

In this edition, we have reviewed Marico Ltd and IDFC First. We suggest our reader-investors to HOLD in Marico Ltd and IDFC First 

We had previously recommended Marico Ltd. in Volume 34 Issue 17, dated July 22 to August 4, 2019, under the ‘Choice Scrip’ section. The stocks was then trading at Rs368.15. Marico is a prominent consumer products company, which operates across the dimensions of beauty and wellness, globally. It offers an elaborate portfolio of products covering haircare, skincare, edible oils, health foods, male grooming, and fabric care. 

More than 90% of company topline comes from brands which are market leaders in their segment. With decline in copra prices, the company has been leveraging that benefits in increasing advertisement and marketing spend.This will help increase brand recognition. The scrip was recommended based on sturdy growth momentum across segments, better performance than peers and healthy product portfolio. 

On the consolidated financial front, the company posted the net sales of Rs1,829 crores for Q2FY20, down by 0.44 per cent from Rs1,837 crores in Q2FY19. The PBDT was Rs375 crores, an increase of 15.74 per cent in Q2FY20 from Rs324 crores, posted in Q2FY19. Marico gained a net profit of Rs252 crores in FY19, rising by 17.21 per cent from Rs215 crores, gained in FY18. 

On the annual front, the net sales came in at Rs7,334 crores in FY19, up by 15.81 per cent from Rs6,333 crores in FY18. The PBDT in FY19 increased by 12.77 per cent to Rs1,360 crores from Rs1,206 crores in FY18. The company’s net profit in FY19 was Rs1.136 crores, up by 37.36 per cent from Rs827 crores, posted in FY18. 

Marico has been able to sustain despite slow consumer demand. With an increase in free-spending by consumers, the demand for the company’s products will grow. Thus, we recommend a HOLD. 

We had recommended IDFC First Bank Limited in Volume 34 Issue No. 10, dated April 15 to 28, 2019, under the ‘Analysis’ section. The stock was then trading at Rs55.20. IDFC First Bank was founded by the merger of erstwhile IDFC Bank and the erstwhile Capital First. The bank’s segments include treasury, corporate or wholesale banking, retail banking, and other banking business. The scrip was recommended based on its growth and merger synergies. 

The net interest earned by the bank in Q2FY20 grew by 72.15 per cent from Rs4,018.16 crores to Rs2,334.16 crores in Q2FY19. The total income in Q2FY20 was Rs4,367.12 crores, an increase of 78 per cent from Rs2,453.48 crores in Q2FY19. For Q2FY20, the bank reported a net loss of Rs679.5 crores due to taking a one-time impact on deferred tax asset markdown as against Rs369.69 crores in Q2FY19. GNPA ratio was 2.62 per cent and 1.63 per cent for Q2FY20 and Q2FY19, respectively. The CRAR ratio in Q2FY20 was 14.65 per cent and it was 19.18 per cent in Q2FY19. 

On the annual front, the net interest earned by the bank in FY19 increased by 33.80 per cent to Rs11,948.17 crores from Rs8,930.01 crores in FY18. The total income earned by the bank in FY19 was Rs12,886.74 crores, an increase of 28.25 per cent from Rs10,047.90 crores, earned in the previous fiscal. The bank incurred a net loss of Rs1,944.18 crores for FY19 as against a net profit of Rs859.30 crores for FY18. 

GNPA ratio was 2.43 per cent and 3.31 per cent for Q2FY20 and Q2FY19, respectively. In FY19, the CRAR ratio was 15.47 per cent, whereas, it was 18 per cent in FY18. Hence, HOLD.