Strong volume growth keeps the FMCG major on track for FY26, but investors are betting that cheaper copra will do the heavy lifting next year.
Marico’s December-quarter results underline why the stock continues to command a premium in the market.
The maker of Parachute and Saffola reported a 27% year-on-year rise in consolidated revenue in Q3FY26, broadly in line with expectations, driven by 8% volume growth in India and sustained momentum in overseas markets. Yet margins remained under pressure, reflecting the lingering impact of elevated raw material costs, even as early signs of relief began to emerge.
Brokerages largely struck a constructive tone, arguing that the company has navigated a tough cost cycle without sacrificing growth.
Volumes hold up
According to Motilal Oswal, domestic revenue rose 28% YoY, while consolidated net sales climbed to ₹35.4 billion in the quarter. The international business delivered 21% growth in constant currency terms, led by Bangladesh, Vietnam, MENA and South Africa.
Much of the headline growth, however, came from pricing. Parachute Coconut Oil posted 50% value growth, even as volumes declined 1%, reflecting successive price hikes taken to offset high copra costs. “Pricing continues to drive growth, but volume resilience remains encouraging,” Motilal Oswal noted.
Anand Rathi echoed the assessment, describing the performance as “healthy and in-line,” with volume growth of 8% in India despite higher consumer prices. It added that Parachute and Saffola volumes were modestly weak due to pricing actions, a trend visible across much of the staples sector.
Hair oils and premium categories do the heavy lifting
Away from Parachute, Marico’s growth engines showed greater balance. Value-added hair oils (VAHO) recorded 29% revenue growth, with Motilal Oswal highlighting high-teen volume growth outside the fiercely competitive Amla segment. Premium personal care continued to scale steadily, while the foods portfolio grew 5%, impacted by SKU rationalisation in categories such as mayonnaise and peanut butter.
Anand Rathi called VAHO the “key growth driver” of the quarter, noting market share gains and a favourable mix shift. Premium personal care and digital-first brands now account for roughly 22% of revenue, helping the company sustain volumes even as core staples face elasticity pressures.
Margin cycle may be turning
The pressure point remains profitability. Gross margin contracted 600 basis points YoY to 43.5%, while EBITDA margin fell to 16.9%, down 220 bps from a year earlier, Motilal Oswal said. EBITDA still grew 12% YoY, supported by scale and cost discipline.
The silver lining lies in input costs. Copra prices have corrected 25–30% from peak levels, and management expects more meaningful softening from April 2026 onward. Both Motilal Oswal and Anand Rathi expect this to translate into 150–200 bps margin expansion over the next two years, aided by calibrated pricing and a richer product mix.
“Operating margins remain muted for now, but the ingredients for recovery are falling into place,” Anand Rathi said.
Outlook: growth now, margins later
For FY26, Marico expects to deliver around 25% consolidated revenue growth, driven by pricing, wider direct reach and momentum across core and emerging categories. Beyond that, management is targeting double-digit PAT growth, with Motilal Oswal modelling a 14% PAT CAGR over FY25–28E.
Valuations, however, leave little room for disappointment. At current levels, the stock trades at over 50x FY26 earnings, reflecting investor confidence in Marico’s ability to compound through cycles. Motilal Oswal reiterated a BUY rating with a target price of Rs 875, while Anand Rathi retained its BUY with a revised target of s 865, valuing the company at 45x FY28E EPS.
What the market is saying
Marico’s share price has held firm in recent months, even as broader FMCG stocks have seen selective derating. That resilience suggests investors are willing to look through near-term margin pain, provided volume growth stays intact and the raw material cycle turns as expected.
For the long-term, the message from this quarter is clear: Marico is still executing well. The real test — and the real upside — lies in how much of the coming cost relief ultimately flows back to margins.
