Target price: NA
- Marico Limited (ML) is into manufacturing of consumer products such as coconut oil, other edible oils, hair oils, fabric care products, hair creams and processed foods. It has made its second acquisition in the Egyptian market by acquiring a hair-care brand, Hair Code.
- The Hair Code acquisition increases its market share to 50 per cent of the Egyptian pre and post wash hair care market. The pre and post wash hair care market in Egypt is growing at about 6.5 per cent per annum. Sales of Hair Code are expected at Rs 35 crore and profit after tax margin of 18 to 20 per cent.
- The acquisitions between Fiancee and Hair Care are estimated to contribute about 4.5 to 5 per cent to sales and about 7 per cent of operating profits during FY08. The acquisition could also act as a platform to promote its Indian-made products in these markets due to access to the distribution network and a better understanding of the markets.
- At the CMP of Rs 540, the stock trades at 24.5x FY07E earnings and 20.6x FY08E earnings.
