Marico stock downgraded by Axis Capital over high valuation concerns By Investing.com
On Tuesday, Marico Ltd (MRCO:LN) experienced a change in stock rating as Axis Capital (NYSE:) Limited adjusted its stance on the company. The firm downgraded Marico from ‘Add’ to ‘Reduce,’ despite raising the price target to INR650.00 from INR590.00.
The revision follows Marico’s first-quarter financials for the fiscal year 2025, which showed a promising increase in revenue and a slight improvement in margins.
The Axis Capital Limited analyst acknowledged the company’s efforts to rejuvenate its core business and enhance profitability, particularly in the food and digital sectors. These initiatives are part of Marico’s strategy, which includes a focus on General Trade (GT) and expanding distribution through Project SETU.
The analyst also noted expectations for a 9% and 10% compound annual growth rate (CAGR) in revenue and earnings per share (EPS), respectively, over the forecast period from fiscal year 2024 to 2027.
Despite these positive aspects, the analyst expressed concerns over Marico’s stock performance over the past three months. The stock has seen a significant increase, which has led to what the analyst considers an unfavorable risk-reward balance.
The current valuation stands at approximately 50 times the forecasted earnings for fiscal year 2026, representing a roughly 20% premium compared to the five-year historical average.
The analyst’s decision to downgrade Marico’s rating reflects a cautious stance on the stock’s future performance in light of its recent price surge. While the company’s strategic efforts and growth prospects are acknowledged, the current market valuation has raised concerns about the potential for future gains.
Investors and market observers will be closely monitoring Marico’s stock in the coming days to see how it responds to the new rating and price target set by Axis Capital Limited.
The revised rating and price target suggest a more conservative outlook on the stock, advising shareholders to temper their expectations for short-term growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
