Marico Ltd Quarterly Results Q2FY27 stock analysis

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Sector Outlook: Positive

Broad-Based Momentum Drives Double-Digit Volume Growth; Multi-Quarter High Operating Profitability and EBITDA Expansion

Marico Ltd., a leading Indian FMCG player with marquee brands such as Parachute and Saffola, reported its Q2FY27 financial results, delivering a robust top-line performance accompanied by multi-year high operating profitability. For the quarter, consolidated Revenue from Operations grew 13.0% YoY (down 1.5% QoQ) to Rs. 3,897 crores, underpinned by 10% underlying volume growth in the India business and 13% constant currency growth (CCG) in the International business (up 23% in INR terms). EBITDA surged 26.6% YoY to Rs. 709 crores (marking its highest growth in 50 quarters), with EBITDA margin expanding by 196 bps YoY to 18.2% (moderating 251 bps QoQ from 20.7% in Q1FY27 due to aggressive brand building), driven by a 600 bps YoY gross margin expansion on the back of softened copra prices and an enriching product mix. Reported and recurring Profit After Tax (PAT) jumped 31.0% YoY to Rs. 550 crores (the highest PAT growth in 51 quarters), up from Rs. 420 crores in Q2FY26 and Rs. 652 crores in Q1FY27. Total operating expenditure increased 10.3% YoY to Rs. 3,188 crores, primarily reflecting heightened Advertising & Sales Promotion (A&P) investments, which rose 44.1% YoY (up 37.9% QoQ) to Rs. 451 crores (11.6% of revenues) to aggressively support innovations and core equity. High-growth engines continued their rapid trajectory, with the Foods portfolio growing 45% YoY to cross Rs. 1,500+ crores ARR and Premium Personal Care scaling to Rs. 500+ crores ARR (alongside Digital-First brands at Rs. 1,150 crores ARR). With over 95% of the portfolio gaining or sustaining market share and double-digit growth across traditional and organized trade alongside quick commerce acceleration, Marico closed H1FY27 with a formidable 17.7% revenue growth and 25.8% EBITDA expansion.

Valuation and Outlook

Marico’s medium to long-term outlook remains exceptionally resilient, underpinned by sustained domestic market share gains, disciplined GTM execution under Project SETU 2.0, and the aggressive diversification toward premium, higher-margin categories. Management reiterated strong confidence in comfortably surpassing the Rs. 15,000 crores milestone in FY27, backed by full-year double-digit domestic volume growth and accelerating constant currency growth in the International business during H2FY27. Consolidated EBITDA guidance for FY27 has been upgraded to mid-twenties growth (24–25%), supported by copra tailwinds, structural cost savings through the ‘MarVal’ program, and operating leverage, which will yield a 120–150 bps full-year EBITDA margin expansion despite elevated A&P outlays. Beyond FY27, Marico expects to sustain at least mid-teens EBITDA growth, advancing briskly toward its Vision 2030 objective of Rs. 20,000+ crores in revenue with a mid-teens EBITDA CAGR (with aspirations to achieve this milestone by FY29). The core portfolio anchors cash flow generation, Parachute Rigids has attained a record 60% volume market share and VAHO continues its double-digit trajectory while scalable growth engines (Foods, Premium Personal Care, and Digital-First) are slated to expand their India revenue share from 23% in FY26 to 27% by FY27E and 33% by FY30E. Supported by healthy balance sheet fundamentals, robust working capital hygiene (net cash cycle of 33 days), and rapid distribution expansion, Marico offers an attractive risk-reward profile for long-term compounders.

Key concall Highlights

Management Guidance and Outlook

Revenue growth: FY27 revenue growth is expected to be in the teens, with an opportunity to move towards mid-teens.
Revenue target: The company is confident of comfortably crossing Rs. 15,000 crores in FY27. Marico is also targeting Rs. 20,000 crores revenue by FY30 with a mid-teens EBITDA CAGR, while aspiring to achieve the target by FY29.
EBITDA growth: FY27 EBITDA growth guidance upgraded to mid-20s (approximately 24–25%), compared with the earlier expectation of around 20%.
India volume growth: Expected to reach double digits for the full year.
EBITDA growth beyond FY27: Management expects at least mid-teens EBITDA growth from FY28 onwards.
EBITDA margin: FY27 margin expansion is expected at approximately 120–150 bps, although management has not provided specific margin guidance for FY28.
International growth: Marginal improvement expected, primarily driven by Bangladesh.
Growth portfolio: Expected to sustain 20–25% growth while progressively improving profitability.

Commodity Costs, Margins & A&P

Copra prices remain approximately 35% below last year’s peak, supporting profitability.
Crude-linked derivatives and vegetable oil prices have increased due to geopolitical developments and weather-related concerns.
Management expects to manage cost pressures through calibrated pricing, procurement efficiencies and cost management.
A&P expenditure increased 44% YoY, with investments focused on shampoo, Amla, Parachute, VAHO and Foods.
A&P-to-sales is expected to remain elevated in FY27, with normalisation towards 10–10.5% from FY28 onwards.

India Business Performance

Parachute Rigids delivered 13% volume growth, its highest in 22 quarters, gaining 570 bps in volume market share to reach 60%.
Value-Added Hair Oils (VAHO) recorded 21% value growth for the sixth consecutive quarter, gaining 80 bps in value market share. Mid and premium segments delivered mid-teens volume growth.
Amla hair oil is targeting an ARR of Rs. 100 crores by FY28 and Rs. 200–250 crores by FY30.
Saffola Edible Oils recorded 6% revenue growth, while volumes declined in high single digits due to rationalisation of low-margin variants. The portfolio reset is expected to conclude over the next 2–3 quarters.
Premium Saffola products, including Cold Pressed Oils and Saffola Total, continued to outperform the overall franchise.

Foods Business

Foods business delivered 45% growth, crossing an ARR of Rs. 1,500 crores.
Saffola Foods recorded early-teens growth, led by Oats, Muesli and Soya Chunks. Saffola Oats retained its leadership position.
True Elements, 4700BC and Cosmix are scaling up ahead of management expectations.
Soya Chunks currently has an ARR of approximately Rs. 100 crores, with plans to premiumise the category and expand participation in protein-based products.
Management is focusing on portfolio expansion and operating synergies to improve overall profitability.

Premium Personal Care & Digital-First Portfolio

Premium Personal Care crossed an ARR of Rs. 500 crores, driven by Livon Serums and Parachute Advansed Protein Shampoo.
Shampoo business is witnessing strong traction across channels, with management targeting Rs. 100 crores ARR in FY27 and Rs. 400–500 crores in the medium term.
Digital-first Personal Care portfolio has scaled to approximately Rs. 1,150 crores.
Beardo has grown over 6x since acquisition in 2020 and is expected to cross Rs. 400 crores revenue in FY27. Profitability has improved by 1,900 bps.
Cosmix and 4700BC are performing ahead of acquisition assumptions. Cosmix has high-teens operating margins, while 4700BC is benefiting from quick commerce and gifting opportunities.
Management expects the overall growth portfolio to deliver 20–25% growth while progressively improving profitability.

International Business Performance

International business delivered 13% constant currency growth and 23% growth in INR terms.
Bangladesh: Grew 5% in constant currency terms despite inflationary pressures. Management expects gradual improvement supported by Project SETU.
Vietnam: Delivered 22% constant currency growth, supported by broad-based portfolio performance and e-commerce.
MENA: Recorded 15% growth despite inflationary and operational challenges.
South Africa: Grew 15%, led by strong hair care performance.
New country development and exports: Delivered 17% growth.
Management expects marginal improvement in international growth, primarily driven by Bangladesh.

Project SETU – Distribution Transformation

Direct distribution reach has increased by over 1.5x, while rural stockists have nearly doubled.
Management estimates that Project SETU has contributed 1–2% incremental volume growth over the last couple of years.
Improved distribution, assortment and execution have supported growth in VAHO and Parachute.
Better sales rhythm and lower trade inventory have reduced BTL expenditure, allowing higher investments in brand advertising.
The first phase of SETU is approximately 70% complete.
SETU 2.0 will focus on AI-led distribution, premium portfolio expansion and increasing digital brand penetration in general trade.