Premium portfolio, strong Q3 results boost outlook for Marico stock

Marico's strong Q3 performance, rising premium product share and steady volume outlook have lifted investor sentiment, though volatility in Copra and risks abroad remain key concerns

Marico Limited stock saw investor interest this week as it hit its all-time-high level of ₹799.8 on Thursday, before correcting to ₹788 apiece on Friday. The stock has risen about 10 per cent since the start of February and has outperformed the Nifty FMCG, which gained 3.5 per cent, as well as the Nifty50 which has risen 3 per cent over this period. This momentum has been driven by a strong third quarter performance, higher share of premium products, market share gains and steady volume growth expectations.

 

Marico’s consolidated revenue was up 27 per cent year-on-year (Y-o-Y) at ₹3,527 crore during the October-December period of financial year 2026 (Q3FY26). Both the India and international businesses had a good showing. India business’ volume saw high-single digit growth of 8 per cent. Revenue jumped 24 per cent Y-o-Y to ₹2,461 crore, registering the third consecutive quarter of over 20 per cent growth, aided by sharp price hikes in parachute hair oil (+51 per cent Y-o-Y).

 

Overall, with lower input cost environment and improving premiumisation in the portfolio, the management expects operating profit to grow in mid-teens and margin to expand by 150-200 basis points over the near- to medium-term. It has maintained a 25 per cent consolidated revenue growth guidance in FY26. It expects strong volume growth momentum in the India business to sustain, even though pricing growth gradually moderates in the quarters ahead.

 

Marico will remain sharply focused on execution, strengthening franchises and driving sustainable volume-led growth, the management said in the third quarter earnings concall. In India, it expects to drive improved trajectory in the core portfolio, while driving the profitable scale-up of foods and digital-first businesses. With input cost easing and margin pressure subsiding, they expect progressive improvement in operating profit growth rates over the coming quarters. Marico has significant local presence in Bangladesh, South East Asia, Middle East, Egypt and South Africa.

 

The stock is the top pick of HSBC Global Investment Research. It has a ‘Buy’ rating with a target price of ₹900 apiece on the stock. An underlying theme across the fast-moving consumer goods (FMCG) sector was the pick-up in value-added hair oil (VAHO) category performance noted across Marico, Bajaj Consumer and Dabur, the brokerage said.

 

Analysts led by Nihal Mahesh Jham of the brokerage believe that Marico merits a premium to its historical average, on account of its more premium portfolio construct and relatively lower exposure to commodity-based products like coconut oils. 

 

The brokerage pointed out that Marico’s aggressive inorganic forays and focus on diversification stands out across the FMCG space. The downside for the stock remains sharp volatility in Copra prices, failure to sustain the volume growth trajectory of Saffola edible oils and geopolitical risks, or competition impacting the performance of international operations.

 

The company derived 75 per cent of its FY25 revenue from India, with the remaining 25 per cent from its international business, of which Bangladesh is the largest. Parachute Coconut Oil is Marico's highest-selling product and accounted for 36 per cent of domestic sales in FY25. Coconut oil is a mature category, but Marico continues to gain market share from unorganised players. VAHO has accounted for 18-22 per cent of sales in recent years, with a low-single-digit CAGR in the last five years. Marico saw an improvement in VAHO performance in H1FY26, which it expects to sustain. 

 

The performance of its Saffola edible oil business is linked to edible oil prices, which have been volatile recently.

 

The company’s food business and digital-to-consumer (D2C) brands have become important revenue growth drivers in recent years, accounting for 22 per cent of its sales in FY25. Marico is now getting into a Copra downcycle, during which its growth as well as market share has historically been impacted by deflation and competition. This has kept some brokerages such as BNP Paribas cautious on the company despite strong performance recently. Over the medium term, the brokerage sees moderate revenue growth potential in the business, with a high dependence on new initiatives such as food and D2C to drive growth. The brokerage firm has a ‘Neutral’ rating on Marico with a target price of ₹835 per share.