 "Marico wins Street backing despite copra-led margin squeeze in Q2FY26")
Marico stock analysis: Marico’s September quarter (Q2FY26) performance drew a broadly positive response from major brokerages, even as input cost pressures, particularly soaring copra prices, compressed margins, analysts said.
Strong top-line growth, resilient volumes, and sustained execution strength kept analysts confident about the company’s medium-term outlook, with most brokerages maintaining a ‘Buy’ or ‘Add’ rating on the Marico stock.
Emkay Global reiterated its ‘Buy’ rating with a target price of ₹850 for September 2026, valuing the stock at 50x P/E. The brokerage highlighted that although the core portfolio recorded weak volume growth due to elevated pricing, newer categories helped Marico deliver a healthy 7 per cent volume growth for the quarter.
However, the sharp rise in copra prices, Marico’s key raw material, dragged gross margins down by 810 bps Y-o-Y to 42.6 per cent. Despite this pressure, operating leverage enabled the company to limit Ebitda margin contraction to 350 bps, settling at 16.1 per cent. Emkay noted that copra prices have stabilised after a 15 per cent correction from July peaks and are expected to remain steady with limited arrivals until the next seasonal flush in March 2026. Reflecting this backdrop, the brokerage raised its revenue estimates but trimmed margin forecasts for FY26.
Nuvama Institutional Equities (Nuvama) also maintained a bullish stance, retaining its ‘Buy’ rating while revising its target price upward to ₹865 from ₹850, rolling forward to FY28 valuations at 45x P/E. Marico posted a 30.7 per cent Y-o-Y jump in revenue, the highest in several quarters, in line with expectations. Ebitda increased 7.3 per cent Y-o-Y, marginally ahead of estimates. ALSO READ | VIP Industries: Why have analysts put the stock 'Under Review'? Check here
India value growth surged 35 per cent, supported by 7 per cent volume growth, though the flagship Parachute coconut oil segment saw a 3 per cent Y-o-Y drop due to elevated copra costs. Value-added hair oils (VAHO) grew 16 per cent Y-o-Y, while the international business recorded 20 per cent Y-o-Y growth in constant currency terms.
Margins, however, remained under pressure – gross margin declined 814 bps, and Ebitda margin fell 351 bps Y-o-Y. Higher input costs and increased advertising spends (up 19 per cent Y-o-Y) contributed to the compression. Therefore, Nuvama analysts cut their FY27-28 EPS estimates on margin concerns but remained optimistic about Marico’s long-term growth trajectory, noting that the stock trades at 59x/53x/42x FY25A/26E/27E P/E.
ICICI Securities echoed the positive sentiment, reiterating its ‘Add’ rating with a revised DCF-based target price of ₹800 (up from ₹780). The brokerage lauded Marico’s “strong and broad-based performance,” despite GST-related disruptions and over 60 per cent price hikes in coconut oils. Volumes held up well, underscoring the franchise strength of Parachute and other core brands. ALSO READ | Nuvama retains 'Buy' on Eureka Forbes post Q2, sees 28% upside; here's why
More than 90 per cent of Marico’s portfolio gained market share during the quarter, aided by enhanced execution under Project SETU and strong traction in organised trade channels. Premium categories continue to scale up, with foods and premium personal care accounting for 22 per cent of India revenues in the first half of FY26. ICICI expects revenue, Ebitda, and PAT to clock a compound annual growth rate (CAGR) of 13 per cent, 13 per cent, and 11 per cent respectively over FY25-28, but flagged copra-price inflation as the key downside risk.
That said, while elevated input costs have temporarily squeezed margins, brokerages remain confident that Marico is well-positioned to sustain healthy growth, scale its emerging categories, and rebuild profitability as commodity pressures ease.