Marico aims to double revenue, targets mid-teens earnings growth: Emkay

Emkay Global Financial has reiterated its ‘Buy’ rating on Marico stock with a target price of ₹850, valuing the stock at 50x Sep-26E P/E. After meeting the company’s management to assess its medium-term outlook and guidance, the brokerage said it continues to see Marico strengthening its portfolio in line with evolving consumer trends, while building new growth engines and improving profitability.

 

Management is maintaining its ambition to double revenue over the next five years and to become a globally recognised digital FMCG company, targeting the number 2 position in India after Honasa in the digital-first space. The company is also aiming for a mid-teens earnings compound annual growth rate (CAGR) over the same period.

Focus on low-teens growth in the next five years

As outlined in Marico’s FY25 annual report, the company is targeting low-to-mid-teens CAGR in revenue over the next five years, led by a blend of organic and inorganic growth.

 

Marico’s core business in India is likely to see mid-to-high single-digit growth, the food business CAGR of more than 20 per cent, digital brands CAGR of 25 per cent, and international business CAGR in the mid-teens.

 

The only major risk to achieving this aspiration, management cautioned, would be a broader slowdown in overall consumption. However, goods and services tax (GST)-related tailwinds from Q4FY26 are expected to support demand recovery.

 

Marico continues to see pressure at the bottom end of the urban consumer pyramid, where income growth is more critical than easing expenses, the brokerage noted. At the same time, Project Setu—its initiative to strengthen general trade—has been delivering strong results by:

• Better addressing assortment needs in kirana/general trade, aiding performance in VAHO (value-added hair oils).
• Plugging distribution gaps in chemist outlets, food specialty stores and beauty & cosmetics channels.
• Aligning more closely with quick commerce (Q-Com), where the revenue mix now stands at around 5 per cent.

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Margin expansion focus

Marico is targeting a mid-teens earnings CAGR over the next five years with a clear focus on diversifying the sources of profitability. Historically, profitability was heavily skewed towards the coconut oil portfolio; management now aims to gradually rebalance this over the coming five years.

Emkay highlights three key levers for margins:

 

Easing copra prices:Copra prices have corrected by around 20 per cent from their peak, creating room to improve margins. With the next copra flush expected from March 2026, price stability is anticipated, which is favourable for Marico’s key categories. Management expects margins in H2FY26 to be better than in H1FY26.

 

Profitability in foods: The company is taking corrective actions to enhance profitability in the foods portfolio, which is simultaneously a strong growth engine (20 per cent+ CAGR) and a key future margin contributor.

 

Scaling profitability of digital-first and new-age brands: As digital-first premium personal care and new-age brands move closer to break-even and scale, they are expected to add to overall margins. The company is targeting double-digit operating margins (OPM) from digital-first premium personal care offerings over time, while pushing for improved profitability in foods as well.  ALSO READ | Insurance sector on upswing; brokerages forecast 9-10% FY26 retail APE rise

Execution remains the key; Marico seen well placed on consumer alignment

Emkay characterises Marico as an “execution play”, pointing to its responsiveness in aligning with evolving consumer needs and emerging consumption trends. Post-Covid, the brokerage believes the company has strengthened its management bench, improving its capability to execute on strategy across core, foods, digital brands, and international markets.

 

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