Marico (MARICO)

FairStock Score: 46/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Superior return ratios: ROE 43.12% and ROCE 45.16% indicate an efficient, high-quality franchise.
• Conservative balance sheet: Debt/Equity of 0.14 and Altman Z-Score of 10.36 signal low financial distress risk.
• Healthy cash flow: FCF of ₹742 crore and Piotroski F-Score of 8/9 show good earnings quality and cash generation.
• Promoter alignment: 58.93% promoter holding reflects committed ownership.
• Stable business character: FairStock Score of 62/100 (STEADY) and dividend yield of 1.33% underline predictability.

Concerns

• Rich valuation: P/E of 59.73, P/B of 25.44, EV/EBITDA of 32.57 and PEG of 12.66 leave no room for error.
• No margin of safety: Price is ₹778.90 versus Graham Number ₹95.54 and DCF value ₹122.83, implying -725.42% margin of safety.
• Weak profit growth relative to sales: Sales growth of 25.33% did not translate into profit growth beyond 6.86%, suggesting margin pressure.
• Long-term growth is modest: 5-year revenue CAGR of only 6.12% does not justify a near-60 P/E.

AI Analysis

When I evaluate Marico, I start with the business itself. The numbers describe a high-return, conservatively financed enterprise: ROE of 43.12%, ROCE of 45.16%, and debt-to-equity of just 0.14. The Piotroski score of 8/9 and Altman Z of 10.36 reinforce financial strength. Free cash flow of ₹742 crore, promoter holding of 58.93%, and a 1.33% dividend yield show a stable owner-oriented operation. This is the kind of company Graham would respect for its financial health. But value investing is a discipline where the price you pay matters as much as the quality you buy. At ₹778.90, the market cap is ₹1.02 lakh crore, requiring a P/E of 59.73 and a P/B of 25.44. Against the Graham Number of ₹95.54 and a DCF value of ₹122.83, the stock trades with a margin of safety of -725.42%. In other words, the current price has no margin of safety at all. The 5-year revenue CAGR is only 6.12%, and profit growth is 6.86%. Even if the reported 25.33% sales growth persists, paying an EV/EBITDA of 32.57 and a PEG of 12.66 means Mr. Market has priced in years of perfection. This is a good business, likely a stalwart, but I cannot call it a good investment at this price. I would wait for a meaningful correction toward realistic value, or for earnings to grow so strongly that the valuation becomes reasonable. Until then, the wise action is patience. Graham taught us to buy with a margin of safety, and here, none exists.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer