Marico Q3 shows steady growth; brokerages bet on margins as copra cools

Marico’s December quarter of financial year 2026 (Q3FY26) performance has reinforced Street confidence in the company’s growth strategy, even as near-term margins remain under pressure from elevated copra prices, analysts said. 

 

Brokerages tracking the fast-moving consumer goods (FMCG) major highlighted strong topline momentum across domestic and international markets, recovery in value-added hair oils (VAHO), and improving prospects for profitability as key raw material costs begin to ease.

 

Marico reported consolidated revenue growth of about 27 per cent year-on-year (Y-o-Y) in Q3FY26, broadly in line with expectations. Domestic revenues rose 28 per cent Y-o-Y, supported by an 8 per cent volume expansion, while international revenues increased 24 per cent Y-o-Y, or 21 per cent on a constant currency (CC) basis. However, margins remained under pressure, reflecting the lagged impact of higher copra prices.

 

Pricing-led growth, volume resilience

 

Motilal Oswal said Marico’s quarterly performance underscored the company’s ‘steady show’ and continued growth orientation. According to the brokerage, Parachute coconut oil delivered a sharp 50 per cent Y-o-Y value growth despite a marginal 1 per cent decline in volumes, largely driven by price hikes undertaken earlier to offset raw material inflation. Motilal Oswal noted that copra prices have already corrected around 30 per cent from peak levels and management expects a more meaningful softening from April 2026 onwards.

 

VAHO continued to see a recovery, with revenues up 29 per cent Y-o-Y. Excluding the amla segment, where competition remains intense, VAHO volumes grew in the high teens, the brokerage said. Saffola edible oil volumes were marginally lower, with revenues remaining flat as the impact of past price hikes normalised during the quarter. Foods recorded a 5 per cent Y-o-Y growth, affected by SKU rationalisation in categories such as mayonnaise and peanut butter, while premium personal care maintained a healthy growth trajectory.

 

Margins under pressure, relief expected

 

Despite strong revenue growth, Marico’s gross margin contracted sharply by about 600 basis points (bps) Y-o-Y to 43.5 per cent in Q3, although it improved sequentially by 90 bps as copra prices began to cool. Ebitda margin declined 220 bps Y-o-Y to 16.9 per cent, even as Ebitda rose 12 per cent Y-o-Y.

 

Motilal Oswal said management expects mid-teen Ebitda growth and a 150-200 bps margin expansion in FY27 as raw material prices ease. The brokerage reiterated its ‘Buy’ rating on the stock with a target price of ₹875, valuing Marico at 50 times December 2027 estimated earnings.

 

Emkay Global shared similar views, retaining its ‘Buy’ rating with a target price of ₹850. The brokerage said managing the copra downcycle would be critical for both growth and margin recovery. Emkay highlighted Marico’s execution-driven volume delivery and said easing copra prices could help rebuild India margins over the coming quarters.

 

Emerging categories in focus

 

ICICI Securities struck a relatively more cautious tone, maintaining an ‘Add’ rating on the stock with an unchanged target price of ₹800. The brokerage said strong Q3 performance was driven by recovery in VAHO and resilient volumes in Parachute coconut oil despite steep price hikes. Over 95 per cent of Marico’s portfolio gained market share, supported by improved execution under Project SETU and strong traction in organised trade, it added.

 

ICICI Securities noted that the revenue mix continues to shift towards premium and diversified categories, with foods and premium personal care contributing around 22 per cent of India revenues in the first nine months of FY26. However, it flagged profitability in these newer growth engines as a key monitorable, even as the company works to improve margins with moderation in copra prices.

 

Valuation comfort, growth visibility

 

Elara Capital was more upbeat, describing Marico’s growth as ‘superior’ and valuation as attractive. The brokerage highlighted domestic volume growth of 8 per cent Y-o-Y, led by VAHO, foods and premium personal care, and said declining copra prices alongside sustained double-digit growth in core and emerging categories reinforce its positive stance. Elara maintained its ‘Buy’ rating with a target price of ₹900, valuing the stock at 42 times December 2027 estimated earnings.

 

Therefore, brokerages expect Marico to deliver around 25 per cent consolidated revenue growth in FY26, supported by pricing actions, expanded direct reach and strong momentum across core categories. 

 

With raw material pressures showing signs of easing and a gradual margin recovery on the horizon, analysts believe Marico is well placed to sustain double-digit earnings growth over the medium term, supporting its premium valuation.   

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