Marico kicked off FY26 on a strong footing, delivering best-in-class performance among staple peers in the June quarter (Q1FY26), with a 9% volume growth. This growth was primarily driven by its new franchises (Foods and Premium Personal Care portfolio), alongside a recovery in volumes for Saffola edible oils and VAHO.
The company has been aggressively focusing on expanding its Foods and Premium Personal Care portfolios, including digital-first businesses. As a result, the Foods segment posted 20% YoY value growth, while it maintained continued growth in its digital-first portfolio, comprising Beardo, Just Herbs, and the personal care portfolio of Plix.
Marico’s sustained investments in scaling up its Foods and Premium Personal Care segments have not only visibly transformed the revenue composition of its India business but also driven differentiated growth outcomes over recent quarters.
Foods revenue stood at 5x of FY20 levels in FY25, surpassing the ₹900 crore mark. The company aims to grow Foods at a CAGR of over 25% to reach approximately 8x of FY20 revenues (2x of FY24 revenues) by FY27.
Meanwhile, the Digital-first portfolio recorded an ARR of over ₹850 crore in Q1 and is targeted to scale up to 2.5x of FY24 ARR (revised from 2x) by FY27. The company also aims to achieve a double-digit EBITDA margin in this portfolio by FY27 and expects the India revenue share of Foods and Premium Personal Care to expand to 25% by FY27.
Amid these growth plans, Marico aims to reach ₹15,000 crore in revenue over the next two years and ₹20,000 crore over the next five years.
Analysts remain cautious on elevated copra prices
While analysts remain bullish on Marico’s diversification strategy, they caution about elevated input costs impacting margins in the near term. In Q1, EBITDA margins contracted by 360 basis points YoY to 20.1%, largely due to rising raw material costs.
Copra prices, a key raw material for the company’s Parachute oils portfolio, surged 18% sequentially and 107% YoY. Vegetable oil prices moderated following import duty cuts, while crude oil derivatives remained rangebound.
Motilal Oswal trimmed its FY26E EPS due to the recent copra inflation, but it maintained its FY27 and FY28 EPS estimates.
JM Financial expects that profitability is likely to remain under pressure, particularly in 1HFY26 due to a high-margin base and the ongoing copra inflation cycle. As a result, EBITDA growth is expected to be subdued. While management has not provided specific guidance on EBITDA, the brokerage expects greater clarity on the copra cycle in the coming quarters.
Marico’s growth prospectus
Despite brokerages noting pressure on margins due to elevated input costs, they remain bullish on the company’s growth targets. JM Financial stated that it does not foresee any major challenges for the company in achieving its 25% revenue growth target for FY26.
Motilal Oswal added that improvements in market share, accelerated growth in Foods and Premium Personal Care, healthy momentum in the international business, and normalisation of prices are expected to support the company in delivering a stronger revenue performance in FY26.
JM Financial has revised its target price higher on Marico stock to ₹800 from an earlier price of ₹765 and maintained its ‘buy’ rating. Motilal Oswal has also retained its ‘buy’ rating on the stock with a target price of ₹825 apiece.
“We continue to like Marico within our HPC coverage, as execution on portfolio diversification remains strong. Estimates remain broadly unchanged; we will monitor how copra prices evolve going forward,” said JM Financial.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
