Marico Q1 FY27 growth accelerates as Foods and premium care scale

Investment View and Valuation

In its August 5, 2026 result update, ICICI Direct Research highlighted Marico Ltd.'s strong start to FY27, supported by volume recovery in India, strong growth in premium categories and continued international momentum. Marico operates across beauty, haircare and wellness categories in domestic and international markets.

The broker downgraded Marico to HOLD from BUY while retaining its target price of Rs 945. The stock had returned about 20 per cent over the prior year and was trading at 49 times FY27E earnings. ICICI Direct believes this valuation caps further upside despite strong earnings visibility.

Q1 FY27 Financial Performance

Marico reported consolidated Q1 FY27 revenue growth of 23 per cent year on year to Rs 3,957 crore. India business revenue grew 21 per cent to Rs 3,003 crore, while volume growth reached a 20-quarter high of 11 per cent. EBITDA increased 25 per cent year on year to Rs 819 crore, and adjusted PAT after minority interest rose 25 per cent to Rs 630 crore.

Gross margin expanded 34 basis points year on year to 46.6 per cent, aided by copra prices that were 35 per cent lower year on year and by a better product mix. EBITDA margin expanded 36 basis points to 20.7 per cent. Advertising spend rose 25 per cent, with advertising spending at 8.2 per cent of revenue compared with 8.1 per cent in Q1 FY26.

India Business and Category Drivers

The India performance was driven by 10 per cent volume growth in Parachute rigid packs, double-digit volume growth in value-added hair oils and the scaling of Foods and premium personal care. A roughly 10 per cent price reduction in Parachute loyalty packs helped volumes recover. However, management expects Parachute volume growth to normalise to mid-single digits in FY27.

Value-added hair oils delivered 22 per cent revenue growth in Q1 FY27. Management expects double-digit revenue growth and high-teen volume growth in premium and mid-premium products, and is targeting Almond Hair Oil as a Rs 100 crore annual revenue run-rate franchise by FY28.

Portfolio Expansion and Premiumisation

Saffola revenue grew 7 per cent despite a high-single-digit volume decline, as price increases mitigated higher input costs. Marico is deliberately reducing its focus on low-margin Saffola variants and shifting the portfolio towards higher-margin healthy offerings, including cold-pressed oils.

Foods revenue grew 43 per cent and crossed a Rs 1,300 crore annual revenue run rate. Premium personal care exceeded a Rs 450 crore annual revenue run rate, while digital-first brands reached more than Rs 1,100 crore in annual revenue run rate, led by Plix and Beardo.

• Beardo has achieved double-digit profitability.
• Plix is nearing double-digit margins.
• Cosmix was acquired with healthy profitability.
• The remaining digital brands are expected to become profitable within 12 to 18 months.

International and Digital Channel Momentum

International revenue grew 15 per cent year on year in constant-currency terms. Vietnam grew 27 per cent, MENA grew 24 per cent and South Africa grew 8 per cent. Bangladesh posted 4 per cent growth amid a high base, inflation and fuel-price pressures. Management expects the international business to grow in the mid-teens in constant-currency terms in FY27.

Quick commerce grew more than 50 per cent for the core portfolio and accounted for nearly 5 per cent of India business revenue excluding digital brands. Digital channels represented over 20 per cent of India business revenue.

FY27 Guidance and Earnings Estimates

Management retained guidance for double-digit consolidated revenue growth and revenue above Rs 15,000 crore in FY27, with high-single-digit India volume growth. It also guided for high-teen EBITDA growth and roughly 140 to 150 basis points of EBITDA-margin expansion in FY27.

While copra prices are expected to remain range-bound, elevated vegetable oil, liquid paraffin, food and edible-oil costs could pressure Q2 FY27 margins. Marico plans to use selective price hikes, premiumisation and operating efficiencies to mitigate inflation.

ICICI Direct raised its FY27E and FY28E PAT estimates by 5.9 per cent and 4.5 per cent, respectively. The revisions reflect stronger expected growth in Parachute rigid packs, Foods and premium personal care, along with a lower guided tax rate of 18 per cent in FY27E and 19 to 20 per cent in FY28E.

Key Risks

• An extended slowdown in urban consumption.
• Sustained copra and vegetable-oil inflation.
• Increased competition in key categories.