ICICI Sec starts with Buy on Orkla India; regional brands, exports in focus

The spices simmering in Indian kitchens are increasingly being packaged, branded and exported, and Orkla India wants a larger share of that recipe. Backed by century-old MTR and Kerala-based Eastern, the recently listed consumer foods company is positioning itself as a regional powerhouse with national and global ambitions, according to ICICI Securities.

 

In a note dated December 23, 2025, analysts at ICICI Securities said Orkla India’s deep-rooted understanding of regional tastes, combined with improving operational discipline, puts it on track for steady growth across both domestic and export markets. The brokerage has initiated coverage with a ‘Buy’ rating and a target price of ₹800, on the back of improving margins, strong cash flows and scope for selective acquisitions.

 

 

“With room for selective acquisitions and continued focus on execution, we initiate coverage on Orkla India stock with ‘Buy’ rating and DCF-based TP of ₹800,” said Manoj Menon, Dhiraj Mistry, Ashutosh Joytiraditya and Akshay Krishnan of ICICI Securities. 

A stronghold in the South

 

Orkla India’s competitive advantage begins at home, analysts said. Through MTR in Karnataka and Eastern in Kerala, the company enjoys dominant market positions built over decades of brand trust. MTR, founded over 100 years ago, is a household name in Karnataka, while Eastern has shaped spice preferences in Kerala for more than four decades.

 

According to ICICI Securities, Orkla commands about 31 per cent value share in branded spices in Karnataka and 42 per cent in Kerala, with particular strength in blended spices. In Andhra Pradesh and Telangana, it holds around 15 per cent share, making it the second-largest player. In convenience foods, covering ready mixes and meals, the company has an 18.6 per cent market share.

 

This regional dominance is more than just scale. It gives Orkla an edge in tailoring flavours, pricing and product formats to local palates, creating what the brokerage describes as a “strong competitive moat”.  ALSO READ | Angel One sees value in Welspun Corp on pipe leadership; assigns 'Buy'

Riding India’s packaged food shift

 

Orkla operates in two fast-growing categories, spices (₹34,500 crore) and convenience foods (₹7,900 crore), together forming a ₹42,400 crore market. These segments are expected to grow at 12-16 per cent annually over the next five years, driven by rising urbanisation, higher incomes and a steady shift from unbranded to branded products.

 

To tap this opportunity, Orkla is expanding its product portfolio with new blended spices, ready mixes and ready-to-eat meals, while deepening distribution in its core southern states. ICICI Securities expects domestic growth to be driven by innovation, wider reach and region-focused marketing, resulting in steady volume-led expansion.

 

Exports add flavour to growth

 

Exports already contribute 21 per cent of Orkla India’s revenue, and the company is the largest exporter of branded spices from India, with a 22 per cent share. Its products reach over 40 countries, largely catering to the Indian diaspora in the Gulf, the US and the UK.

 

As global demand for Indian cuisine grows, Orkla is customising products for local tastes, such as Arabic masala blends for West Asia. ICICI Securities expects export revenues to grow at a 12 per cent CAGR between FY25 and FY28, with exports forming a richer mix of blended spices and convenience foods, supporting margins.  ALSO READ | Emkay says 'Add' Dalmia Bharat on demand revival, capacity expansion plans

 

Operational discipline boosts profitability

 

Beyond growth, Orkla’s investment case rests on improving profitability, analysts highlighted. The company has a track record of extracting efficiencies from acquisitions. Since acquiring Eastern, Orkla has lifted overall Ebitda margins by 360 basis points (bps) to 16.6 per cent over FY22-25, through better productivity, working capital control and cost optimisation.

 

ICICI Securities sees further scope for gains through manufacturing rationalisation, digitalisation and product mix upgrades. The brokerage estimates Orkla could generate over ₹1,000 crore in free cash flow over the next three years. While reported return on capital employed (ROCE) appears modest due to goodwill from acquisitions, underlying ROCE is already strong and expected to rise sharply by FY28.

 

Acquisitions as the next course

 

Building brands from scratch in new states is costly and slow, given India’s diverse taste profiles and entrenched local loyalties. Orkla’s strong cash flows therefore open the door to selective acquisitions of regional brands, a strategy it has successfully executed in the past.

 

Valuation and risks

 

ICICI Securities values Orkla India at 30 times September 2027 earnings, factoring in revenue, Ebitda and profit CAGRs of 9 per cent, 11 per cent and 10 per cent, respectively. 

 

Risks, analysts believe, include commodity price volatility and competition from unorganised local players, but for now, Orkla appears well placed to keep its growth recipe on track.   

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