Marico eyes 30% Q2 revenue surge on price hikes; margin pressure temporary

Marico's India volumes are projected to grow 7 per cent Y-o-Y, while domestic pricing gains are estimated at 26 per cent.

Marico appears set to sustain growth in Q2FY26, with price hikes cushioning the impact of rising input costs, analysts said. 

 

Consolidated revenue is expected to jump 30 per cent year-on-year (Y-o-Y), led by steep price increases in the Parachute portfolio, strong momentum in value-added hair oils (VAHO), and resilient international markets, according to Nuvama Institutional Equities (Nuvama) analysts.

Domestic pricing and GST benefits drive topline

 

India volumes are projected to grow 7 per cent Y-o-Y, while domestic pricing gains are estimated at 26 per cent. About 30 per cent of the India business has benefited from GST rationalisation, giving an extra boost. Overall, the domestic business is expected to grow roughly 30 per cent Y-o-Y, supported by a stronger product mix and price hikes.

 

Parachute sales are likely up 45 per cent Y-o-Y, despite a 2 per cent volume dip due to inflationary copra prices. Adjusting for grammage cuts, volumes are expected to be flat. The Saffola franchise could grow 24 per cent Y-o-Y, with edible oils seeing flat volumes but high-teen value growth, while the Foods segment is projected to expand over 25 per cent. 

 

The VAHO segment is set for an 18 per cent Y-o-Y growth in Q2FY26, ahead of initial estimates of 10 per cent, supported by demand recovery in key brands and increased rural penetration. Overall, domestic volume growth is expected in the high single digits, albeit moderating sequentially.

 

International business keeps momentum

 

Marico’s international operations are expected to grow 23 per cent Y-o-Y in constant currency, outperforming the earlier 16 per cent forecast. Bangladesh and MENA markets are likely to lead growth, while other regions remain steady.

 

Margins under pressure, but outlook improves

 

Despite robust revenue, margins are likely to face short-term pressure. Gross margin is forecast to decline 729 basis points Y-o-Y to 43.5 per cent, and Ebitda margin by 384 bps to 15.8 per cent. Consolidated Ebitda should rise 4 per cent Y-o-Y, in line with past trends, with A&P spend at 9.3 per cent of revenue.

 

With copra prices stabilising after a 10-12 per cent correction, margin pressures are expected to ease in H2FY26, supporting modest operating profit growth.

 

Therefore, analysts at Nuvama maintain a ‘Buy’ rating on Marico with a target price of ₹850, on the back of strong domestic pricing traction, recovery in international markets, and easing input costs.