Buy Marico Ltd for the Target Rs 1,000 by Motilal Oswal Financial Services Ltd
Growth outperformance to continue in FY27
* Marico appears well placed to deliver healthy earnings growth in FY27, supported by Parachute recovery amid a favorable copra cycle, stable momentum in value-added hair oils (VAHO), and continued scale-up in Foods and digital-first brands. The company delivered a strong performance in FY26, with 26% revenue growth and 11% APAT growth, outperforming FMCG peers (Exhibit 1). Management commentary remains positive for FY27, with guidance of high-single-digit volume growth in India, double-digit consolidated revenue growth and high-teen EBITDA growth.
* In India, Parachute is entering the volume recovery mode as copra prices have corrected ~45% from the peak and the company has already reduced prices by 15- 20%, which supported double-digit volume growth in 1QFY27. VAHO remained the standout performer, delivering ~20% growth in FY26, and is expected to sustain 20%+ growth in 1QFY27. In Saffola oils, the company focuses on profitability. Marico expects its India business to deliver double-digit volume growth and more than 20% revenue growth in 1QFY27.
* Marico is well positioned from a margin perspective, as copra (~50% of RM basket) has entered a correction cycle after witnessing a sharp 130% inflation over the last two years. Management has guided for 150-200bp EBITDA margin expansion in FY27. We model EBITDA margin of 18.9% in FY27E and 19.6% in FY28E vs. 17.1% in FY26.
* Marico’s digital-first portfolio is expected to achieve double-digit EBITDA margins by FY27 end, which should expand further to the teens by FY30. In international business, Bangladesh’s share has declined from ~50% in FY20 to ~45% in FY26 and is expected to fall further to 35% by FY30, indicating diversification across other markets.
* We model a CAGR of 13%/21%/18% in revenue/EBITDA/APAT over FY26-FY28. We maintain our BUY rating with a TP of INR1,000 (50x P/E on FY28)
Parachute volume rebounds; VAHO sustains momentum
Parachute coconut oil (36% of India)
* Parachute saw muted volume performance in FY26 (down 2%) due to high copra inflation, though value growth remained strong at ~43%, driven by price hikes and selective grammage cuts. With copra prices now down ~45% from the peak, Marico has already cut prices by 15-20%. It helps to boost demand, as reflected in the double-digit volume growth Marico expects in 1QFY27. As pricing normalizes, the gap between value and volume growth will also narrow.
* While the decline in copra prices typically raises the risk of competition from regional/smaller players, management believes Marico remains relatively better placed, supported by its stronger procurement, supply chain and inventory management capabilities. The company also highlighted that during the inflationary cycle, it had increased prices by only ~60% despite a 130% surge in copra prices, helping retain competitiveness vs. loose coconut oil.
Saffola edible oil (17% India revenue)
* The segment delivered 2% volume growth and 13% revenue growth in FY26 amid an inflationary environment in edible oils. Management indicated that the category will continue to prioritize profitability over volume growth. The company expects low- to mid-single-digit volume growth in FY27.
* Marico is also driving premiumization through higher-margin segments such as Saffola Gold, Saffola Total and cold-pressed oils, which should aid realizations and margins. In 1QFY27, this segment is expected to report mid-single digit price-led revenue growth. Volume has declined as the company rationalized the supply of select variants to protect profitability.
Value added hair oil (18% India revenue)
* VAHO delivered 20%+ growth in FY26, led by robust traction in the mid and premium segments of the non-Shanti Amla portfolio. Momentum strengthened in 2HFY26, with 20%+ volume growth and market share gains (+100bp), aided by premiumiZation, rural expansion under Project SETU, and improved distribution reach.
* Management expects the category to maintain double-digit growth in FY27, with 1QFY27 revenue growth likely in the twenties.
Valuation and view
* Marico aspires to surpass INR150b in revenue in FY27 and INR200b by FY30. The company aims to deliver a double-digit revenue CAGR over FY26-30, backed by strong volume growth and international business growth in the teens (CC) with mid-teens EBITDA CAGR.
* Diversification is steadily improving the resilience of the international portfolio, with Bangladesh’s revenue share declining from ~50% in FY20 to ~45% in FY26, which is expected to reduce further to ~35% by FY30.
* To improve its domestic distribution reach, Marico has also started Project SETU, which helps drive growth in GT through a transformative expansion of its direct reach.
* We model 13%/21%/18% revenue, EBITDA and APAT CAGR over FY26-FY28. Given its sustained growth trajectory, diversifying revenue streams, and strong focus on TAM expansion, we believe the stock’s premium valuation is likely to be sustained. Marico remains one of our topics in our coverage universe. We reiterate our BUY rating on the stock with a TP of INR1,000 (based on 50x Mar’28E EPS)
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