This Article is From Jan 08, 2013

Brokerages positive on Marico demerger, shares hit 52-week high

Brokerages positive on Marico demerger, shares hit 52-week high

Shares of FMCG firm Marico jumped to a 52-week high on the NSE Tuesday following the company's announcement of restructuring yesterday. The stock was the top gainer on the BSE FMCG index.

At 12.40 p.m., it traded 2.5 per cent higher at Rs 233 while the broader Sensex was down 0.2 per cent to 19,653.

Marico's business will be partitioned into FMCG and skin care. The latter will be called Marico Kaya Enterprises Ltd (MaKE). Shareholders of Marico will be issued one share of MaKE, with a face value of Rs 10 each, at a premium of Rs 200 per share for every 50 shares of Marico with a face value of Re 1 each.

Kaya is likely to report revenues of Rs 350 crore and losses of Rs 20 crore in the current fiscal (2012-13). Kaya's demerger will impact Marico's revenues negatively by 7 per cent but profits would go up by 5 per cent, analysts said.

Here's what brokers say on Marico's demerger:

CLSA: Marico now becomes a pure play consumer company.

UBS: Demerger of Kaya will help improve return ratios for Marico.

Kotak: Kaya price discovery is a positive.

Nomura: Kaya Spin off is positive for the stock.

Marico's board on Monday approved restructuring of the company's businesses and corporate entities. The restructuring, effective from April 1, 2013, involves demerger of the skin care business under the Kaya Clinic brand as a separate entity from Marico's consumer products business.

Marico, which is present in more than 25 countries across Asia and the African continent, had reported turnover of Rs 4,000 crore in 2011-12.

The company's portfolio includes brands like Parachute, Saffola, Hair & Care, Nihar and Mediker. It recently acquired the personal care business of Reckitt Benckiser.

(With inputs from PTI)