MARICO

Foods and VAHO Fuel Growth Beyond Parachute

has emerged as a relative outperformer in 2026, with its stock largely flat even as the Nifty FMCG index fell 16% YTD. The key buffer has been copra prices, which have dropped ~35% from their peak and are expected to remain range-bound. With copra forming ~50% of Marico’s raw material basket, the decline has cushioned margins against war-led input inflation, giving the company stronger earnings visibility compared to peers. Margins & Profitability - Gross margin improved to 43.5% in Q3FY26 from 42.6% in Q2. - Q4FY26 gross margin estimated at 44.8% (JM Financial), though below 48.6% in Q4FY25. - Sequential margin expansion driven by easing copra costs. - EBITDA expected to grow ~15% YoY in Q4, aided by brand investments and cost tailwinds. Revenue & Segmental Growth - Consolidated revenue grew in the early 20s YoY in Q4, meeting FY26 aspiration of mid-20s growth. - India business: high single-digit underlying volume growth. - Parachute franchise: selective price cuts passed on copra benefits. - Foods business: high-teens value growth. - Premium personal care/D2C brands: beat expectations. - International business (~25% of revenues): high-teens constant currency growth, except Gulf region impacted by war. Valuation & Outlook - Stock trades at 46x FY27E earnings (Bloomberg consensus)—not cheap, but supported by resilient growth drivers. - Nomura expects Parachute price cuts to moderate sales growth but improve margins, driving double-digit to mid-teens operating profit growth. - Risks: slowdown in foods or premium personal care could temper sentiment. Conclusion Marico’s reliance on copra has turned into a strategic advantage, insulating it from crude-linked cost shocks. With margin levers in foods, VAHO, and D2C brands, the company is positioned for sustained earnings growth into FY27/28, though execution in premium categories will be critical.