Company Update : Marico by Motilal Oswal Financial Services Ltd
Revenue growth to cross 30%; expect modest operating profit growth
Please find below the key highlights from Marico (MRCO)’s 2QFY26 prequarterly update:
Business overview – consol. revenue growth in thirties
* The sector witnessed stable demand trends during most of the quarter. MRCO expects demand sentiment to gradually improve during the upcoming festive season and months ahead, aided by easing inflation, above-average monsoons, healthy crop outlook, and policy stimulus.
* About 30% of MRCO’s India business has benefited from the GST rate rationalization. It has passed on the benefits of the revised GST rates to consumers across relevant product categories, reinforcing affordability and accessibility.
* Domestic business continued to exhibit steady momentum in Jul-Aug’25, though it saw a transitory impact of disruption in trade channels and purchases by the Canteen Stores Department ahead of the implementation of new GST rates in Sep’25. That said, underlying volume growth remained in high-single digits, albeit moderating sequentially.
* Consolidated revenue growth YoY will be touching the 30s on the back of pricing interventions and mix improvement, thereby closing the first half of the year on a strong note and staying well on course to achieve the fullyear target (23% in 1QFY26; 8% in 2QFY25).
International business: growth in 20s (constant currency terms)
* In 2QFY26, MRCO’s international business maintained its robust momentum, with constant currency growth touching the 20s.
* Bangladesh and MENA businesses visibly outperformed, while other markets were steady in their course.
Costs and margins
* Copra prices remained rangebound after correcting ~10-12% from the highs.
* Vegetable oil prices also remained high, while crude oil derivatives were benign.
* MRCO expects gross margin to come under incremental pressure on a relatively high base and partly due to the pricing-led high denominator effect. MRCO expects gross margin pressures to ease from 2HFY26.
* Despite the input cost pressures and continued commitment to A&P investments, MRCO expects modest operating profit growth on a YoY basis.
Segments
* Parachute recorded low-single-digit decline in volumes amid hyperinflation in input costs and pricing conditions. After normalizing for ml reductions in lieu of price increases, the brand saw flat volume during the quarter, demonstrating formidable strength even after effective price hikes of more than 60% on a YoY basis.
* Saffola Oils delivered flat volumes with a high base and revenue growth in the high teens.
* Value-added Hair Oils delivered growth in the high teens, reflecting a stable recovery path. MRCO expects the franchise to maintain a healthy growth momentum over the near and medium term, supported by its focus on the mid and premium segments of the portfolio, enhanced direct reach driven by Project SETU, and the recent GST rate rationalization.
* Foods and Premium Personal Care (incl. digital-first brands) maintained the accelerated scale-up and kept up the pace of diversification.
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