Section 1: Company Overview and Fundamentals

1.1 Company Overview:

The Scotts Miracle-Gro Company (NYSE: SMG) is amongst the world’s largest marketers of branded consumer products for lawn and garden care. It is having the industry’s most recognized brands and its Scotts®, Miracle-Gro® and Ortho® brands are market-leading in their categories. The company’s wholly owned subsidiary, The Hawthorne Gardening Company is a leading player in delivering nutrients, lighting, and other materials that finds usage in the indoor and hydroponic growing segment.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders have been highlighted in the chart below, which together form ~65.48% of the total shareholding.

1.4 Key Metrics:

The company stayed within its leverage covenants and is progressing to return to acceptable levels of profitability. SMG has reported an improvement in the current ratio to 2.06x in FY22 from 1.77x in FY21. However, the company’s debt to equity significantly increased to 20.11x in FY22 from 2.26x in FY21.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

2.2 Insights of FY22:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 22, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.