Buy Marico, target Rs 410: Dharmesh Shah

Marico is one of India’s leading consumer products companies operating in the beauty and wellness space. Copra, which accounts for 45-50 percent of the company’s material costs, is a key raw material used to make coconut hair oil. We believe the fall in copra prices from Rs 144.33 per kilogram January 2018 peak to Rs 91.65 per kg in October 2018 augurs well for Marico.

The share price of Marico has undergone periodic secondary phases of consolidation during a multiyear secular up move. Prices have been forming higher peaks and troughs on weekly charts as buying demand emerged from key value area of Rs 285.

We believe that the past six quarters of healthy consolidation (Rs 285-385) has set the stage for the next leg of the up move. Hence, this offers a fresh entry opportunity from a medium-term perspective

The last three years price action has been captured in a well-defined upward sloping channel (drawn adjoining lows of November 2015-November 2016 of Rs 189 and Rs 235 projected from August 2016 at Rs 307).

The lower band of the rising channel is placed around Rs 330 levels which also coincides with the 50 percent retracement of the last leg of the up move (Rs 295–369) also placed at Rs 332 levels.

In a nutshell, we expect the stock to resolve higher from here on and head towards Rs 410 as it upper band of the upward sloping channel which also coincides with the 123.6 percent external retracement of last decline (Rs 388–283), placed around Rs 412 levels.