MARICO

Q1FY26-Topline grows but margins under pressure

-> Robust Q1 Performance:

delivered strong top-line and consistent earnings growth in the June quarter. India's volume growth reached a multi-quarter high, fueled by its core portfolio, premium products, and digital-first brands. -> Core Portfolio Strength: Parachute saw strong sales growth despite a marginal volume decline, demonstrating pricing power amid high copra inflation. The value-added hair oil (VAHO) portfolio also showed a sustained recovery. Marico continues to gain market share from unorganized players, even as the core category faces a slowdown. -> Strategic Growth Drivers: The Saffola Oil portfolio's volume growth was boosted by a reduction in vegetable oil import duty. Digital-first brands like Beardo, Just Herbs, and Plix scaled new highs, reaching an annualized revenue run rate (ARR) of Rs 850 crore. The international business also maintained a strong growth trajectory, particularly in Bangladesh. -> Outlook & Valuation: Marico's strategic diversification into high-growth food and premium personal care (D2C) segments has yielded results and de-risked its core portfolio. These margin-accretive businesses are expected to drive incremental growth and profitability. The company aims for double-digit consolidated revenue growth in the medium term. With a valuation of 42x FY27 estimated earnings, the stock is considered reasonably priced, with multiple levers for margin expansion that could lead to a re-rating.