Buy Marico Ltd For Target Rs. 810 By Emkay Global Financial Services Ltd
We maintain BUY with Jun-26E TP of Rs810, on 50x P/E. We see improved execution ahead helping in driving growth and better margins which would enable the company to see ~12% earnings CAGR over FY25-28E. The new portfolio (1/4th of consolidated revenue) in India and internationally is aligning with consumer needs, enhancing longevity of growth. In India, the new-age portfolio in food and digital brands accounts for 22% of revenue. Internationally, Marico has created a premium portfolio, which represents 29% of sales. We see execution in this portfolio being key for its aspiration to double revenue by 2030 (~15% CAGR). In FY25, the company’s earnings grew by 10% which helped with a better dividend and return profile (ROE ~42%, +3ppt YoY), although higher working capital needs kept the OCF flat YoY.
Aspiring to double revenue by 2030 by strengthening growth construct Having crossed the Rs100bn milestone in FY25, the company now aims to double revenue over the next 5Y. The focus remains on outperforming core categories, gaining market share, and scaling up emerging businesses profitably. In India, the management sees tailwinds in rural and opportunities among the youth (where D2C brands are reshaping the FMCG ecosystem). Ahead, Marico would maintain its thrust on execution around newage consumers, where needs are evolving fast. In FY25, the company’s new growth engine in India (combined ARR of Rs20bn) was sized at Rs9bn in food, Rs3bn in premium personal care, and Rs6bn in the digital-first portfolio. Amid digital brands, Plix is now the biggest with revenue of Rs4.3bn (grew 179% YoY; holds the potential to reach Rs10bn in the medium term), followed by Beardo at Rs2.1bn (grew 24% YoY; medium-term potential at Rs5bn). The company maintains its focus on general trade (5.8mn outlets; under Project SETU, it aspires to expand its current 1mn direct reach to 1.5mn outlets by FY27). Internationally, its focus is on innovation and expansion in premium personal care categories, which now account for 29% of international revenue.
Coconut oil revenue concentration influences profitability Marico’s sizable revenue (1/3rd in India and ~3/5th in Bangladesh) is concentrated in the coconut oil segment, which now accounts for 31% of revenue. With a focus on diversification, it has reduced category dependence by ~5ppt in the last five years. This diversification is reflected in relatively better gross margin management in the current inflationary cycle. We see steady revenue diversification ahead which will arrest margin volatility. Copra, a key raw material, has seen a sharp surge in prices in the last 6M across India and Indonesia. Recent trends suggest easing in copra prices, with price deflation accelerating on improvement in seasonal supplies. We believe the initial thrust should be on maintaining the current price premium; as copra prices reach comfort zone, the company should focus on recouping the price premium.
Valuation aligns with 5YF average; re-rating likely on enhanced execution We like Marico, given its attentiveness to align the business with evolving consumer needs. Its current valuation (FY27E P/E at 43x) aligns with the 5YF average P/E which is likely to expand on better delivery ahead. We maintain BUY with a TP of Rs810.
Targets to double revenue by 2030
Aspires to be a globally admired digital FMCG company
As the company attained the revenue milestone of Rs100bn in FY25, the management’s thrust is to double revenue in the next five years. It has a clear roadmap in place rooted in innovation, purposeful brand-building, and operational excellence. The management’s thrust remains on a) outperforming the category and gaining share in core portfolios and b) profitable scale-up of emerging businesses. The company will have strategic investments and a commitment to building scalable, resilient businesses; it has cultivated a vibrant new-age digital-first portfolio that is progressively stepping up its contribution to both the topline and bottomline each year.
Focus on 4Ds: Diversification, Distribution, Digital, and Diversity
The management’s thrust is on driving the 4Ds to deliver sustainable and profitable growth – Diversification, Distribution, Digital, and Diversity.
- Diversification: In India, the company has made steady progress in diversification with thrust on food and premium personal care, which now contributes 22% to revenue vs 11% in FY22. The management’s endeavor is to expand the contribution to 25% by FY27. Notably, the rapid scale-up in these portfolios was accompanied by an improvement in their margin profiles, thus reflected in their share of India Net Contribution moving to double digits (~5x of FY22) in FY25. Internationally, faster growth in MENA and South Africa helped in reducing dependence on Bangladesh to 42% vs 51% in FY22. Even in Bangladesh, revenue dependence on coconut oil has reduced to 58%.
- Distribution: In India, organized trade continues to gain traction where GT remains a critical channel for its core categories and in tier 2 and beyond markets. The company, under project SETU, has taken concerted efforts to revive GT’s performance. The project is active in 11 states and focuses on rural outlet expansion on a pan-India level, underpinned by robust control frameworks. The initiative will also aid in better assortment in urban stores and drive premiumization. Internationally, Marico continues to deepen its presence across key markets—Bangladesh, Vietnam, Middle East, and Egypt, where it sees meaningful headroom for distribution-led growth.
- Digital: The company has consistently invested in digital and analytical capabilities across the value chain and core functions. Since launching in 2019, its digital transformation initiatives enabled data-led decisions by using AI/ML and real-time systems, driving a measurable impact in demand sensing, spend effectiveness, inventory optimization, and innovation via social listening. The company has embarked on a Nextgen ERP journey by implementing SAP S/4 under RISE (SaaS) across geographies.
- Diversity: Inclusion and diversity are central to Marico’s organizational strategy, with a clear focus on three pillars—Gender, Persons with Disability, and Thought Diversity.
Management capability augmentation aiding growth agenda
The company has onboarded three professionals on the management team – Dr Shilpa Vora (Chief R&D officer) and Vrijesh Nagathan (Chief Information and Digital Technology officer) in Mar-22. In Mar-24, it onboarded Akash Banerji (Executive VP and Head, Digital transformation and Beauty and Styling Digital business). Dr Shilpa aided innovation agenda at the company
The innovation funnel enhanced under Dr Shilpa, who joined Marico in Mar-22 after serving 24 years at Hindustan Unilever. Marico’s focus has been on delivering high-impact, sciencebacked solutions that reflect local consumers’ aspirations, traditions, and evolving lifestyles. The company launched 8 products in FY25.
- In Beauty and personal category, the 4 noteworthy launches were: a) Parachute Advansed Baby Care Range – Nurturing with Nature, Infused with the natural goodness of Virgin Coconut Oil, Almond Oil, and Vitamins E & F; b) Set Wet – Styling for the NewAge Man; c) Livon Style Pro – Breaking Ground Female Grooming Products, and d) Herbs.
For More Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH000000354
