Target: ₹800
CMP: ₹612
Orkla India, led by its strong legacy brands MTR and Eastern, enjoys a dominant market share in its core states of Karnataka, Kerala, AP and Telangana. Its deep understanding of regional tastes gives it a strong competitive moat. Operating across spices and convenience foods, it is expected to deliver steady domestic growth driven by increasing household penetration in core markets and product portfolio expansion.
Exports (21 per cent of revenue) remain a key growth lever with 22 per cent share in branded spice exports and rising demand from the global Indian diaspora. Margin expansion and cash flow generation are expected from operational efficiencies and a better product mix, driving a meaningful improvement in underlying ROCE.
We expect revenue/EBITDA/PAT CAGR of 9/11/10 per cent over FY25–28E, driven by 6 per cent volume growth. Export revenue is expected to grow at 12 per cent CAGR, while domestic revenue should grow at about 8 per cent CAGR over FY25-28E. Better execution and control on overheads to improve EBITDA margin by 100bps over FY25-28E to 17.6 per cent EBITDA margin in FY28E.
With room for selective acquisitions and continued focus on execution, we initiate coverage on Orkla India with Buy rating and DCF-based TP of ₹800.
Risks: Commodity volatility and unorganised competition.contributions becoming common