ICICI Securities has started coverage on Orkla India, giving the company a BUY rating and a price target of INR 800.
Why Orkla India stands out
Orkla India owns popular brands like MTR and Eastern, which dominate the spice and convenience‑food markets in Karnataka, Kerala, Andhra Pradesh and Telangana. Their deep knowledge of regional tastes creates a strong competitive edge.
Growth engines
- Domestic expansion: Steady growth is expected as more households in core states adopt Orkla’s products and the company adds new items to its portfolio.
- Exports: About 21% of revenue comes from overseas sales, and the firm holds a 22% share of branded spice exports, fueled by demand from the Indian diaspora.
- Margin improvement: Better product mix and operational efficiencies should lift margins and cash flow, boosting return on capital employed (ROCE).
Financial outlook
The broker’s valuation, based on a discounted cash‑flow model, puts the fair value at INR 800 per share, well above the current price. The analyst expects margin expansion and stronger cash generation in the coming years.
Potential risks
- Fluctuating commodity prices could pressure earnings.
- Intense competition from unorganised players in the spice segment.
Analyst’s call
With room to acquire selective assets and a focus on execution, ICICI Securities recommends a BUY on Orkla India.
Remember, this is an opinion, not a prediction. Do your own research or consult a certified advisor before making any investment decisions.