Marico's margin pain will linger for some time
Marico Ltd's performance in the March quarter (Q4FY25) has sharpened the market's focus on its pivot to newer growth engines, which have done well even as margin headwinds loom. While the results were largely in line with expectations, Marico's roadmap for recovery and its push to revive core volumes is encouraging.
Consolidated revenue increased 20% year-on-year to
₹
2,730 crore in Q4. India sales, which contribute 75% of the total, jumped 23% on the back of sustained pricing actions and 7% volume growth. International markets saw constant-currency growth of 16%, led by a standout 47% jump in the Middle East and North Africa (MENA), 11% in Bangladesh, and 13% in South Africa.
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The story behind the headline numbers is telling: nearly all of the volume uptick came from the newer foods and premium personal care segments, while Marico's core portfolio—Parachute, Saffola, and VAHO—continued to stagnate, clocking low-single-digit declines. Value growth in foods was a robust 44% last quarter, driven by strong traction in Saffola Oats and new launches in health foods.
The digital-first portfolio, comprising Beardo, Just Herbs and the personal care portfolio of Plix, exited FY25 at an annual revenue run-rate (ARR) of about
₹
750 crore. Beardo has grown about fold-fold since FY21 and Just Herbs revenues crossed
₹
100 crore.
Management is aiming to grow the digital portfolio to
₹
1,000 crore ARR in FY26. This is keeping investors interested. Foods and premium personal care now account for 22% of India revenue and are on track to hit 25% by FY27. Project SETU, Marico's distribution push, aims to expand direct reach to 1.5 million outlets by FY27 and is seen as instrumental in boosting volume growth. Management has reiterated its guidance for double-digit revenue and Ebitda growth in FY26, backed by strong execution across both new and core categories.
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As such, volume recovery in the core categories—particularly Parachute and Saffola—is another key theme. After a few tepid quarters marked by steep price hikes and 'ml-age' cuts (grammage reductions), the company sees green shoots emerging. Optimism comes from easing copra costs, the fading impact of price hikes, weaker regional rivals, and early gains from Project SETU, with rural demand poised to lend further support. As prices stabilise, volumes are expected to pick up from Q2FY26.
Profit margins are a weak spot, though. Gross margin slipped 300 basis points (bps) year-on-year to 48.6%. Ebitda margin shrank 236 bps to 16.8%—the lowest in two years—as copra and vegetable oil prices stayed stubbornly high. Ad spends, too, shot up 35% as Marico continued to invest in its brands.
'Marico has navigated the inflation cycle well by demonstrating strong pricing power in core & also has other margin levers (margin expansion in foods/D2C & some recovery in VAHO) to cushion the impact on profitability," said JM Financial Institutional Securities.
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Copra, a key input for the company, pinched margins for much of FY25 and is expected to stabilise from Q2FY26, setting the stage for a margin recovery. To offset sustained cost pressure, Marico undertook another round of price hikes—about 8-9% in Q1FY26—marking its third increase in the cycle. PL Capital analysts expect margins to remain under pressure until H1FY26 even as improved profits in foods and B2C provide some respite.
Marico stock's rich valuation of about 50 times estimated FY26 earnings, as per Bloomberg data, demands flawless execution. With foods and digital brands growing, and margin recovery expected in the medium-term, the market seems patient, but sustained delivery and lower costs are key to holding that trust.
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