Indian consumer goods major Marico Limited has demonstrated remarkable revenue performance while grappling with significant margin pressures in the second quarter of fiscal year 2026. The company's stock reached a new 52-week high of ₹764.65 on the NSE following impressive top-line growth, though profitability metrics tell a more complex story.
Strong Revenue Performance and Stock Surge
Marico witnessed a substantial 31% year-on-year increase in consolidated revenue, reaching ₹3,482 crore during the September quarter. This impressive growth was driven by broad-based expansion across multiple product categories, with domestic revenue growing at an even more robust 35% pace.
According to JM Financial Institutional Securities, Marico's domestic revenue growth represented "best in class" performance among staples sector peers. The company achieved 7% domestic volume growth, primarily fueled by emerging franchises in food and premium personal care segments, along with value-added hair oils.
Margin Compression Amid Input Cost Pressures
Despite the strong revenue showing, Marico faced significant headwinds from elevated input costs that severely impacted profitability. The company's gross margin contracted by 810 basis points due to soaring prices of key raw materials.
Copra prices, essential for coconut oil production, surged by 113% compared to the previous year, while vegetable oils remained firm. This cost inflation resulted in Marico's EBITDA margin declining by 352 basis points to 16.1% during the quarter, even after implementing price increases.
The company's flagship product, Parachute Coconut Oil, experienced a 3% volume decline, while Saffola edible oils maintained flat volumes. This reflects the impact of strategic pricing adjustments and package volume modifications implemented to counter rising costs.
Future Outlook and Recovery Path
Marico remains optimistic about its future prospects, maintaining its 25% revenue growth target for FY26. The management anticipates double-digit EBITDA growth in the second half of the fiscal year and projects margin expansion of approximately 200 basis points by FY27 from current levels.
Recent developments provide some relief, with copra prices having declined by about 15% from their July peak. Further moderation is expected from March 2026 as new crops arrive in the market, which should support margin recovery efforts.
PL Capital noted in a recent report that "margins are likely to remain under pressure until Q4," though improving performance in foods and B2C segments will offer some compensation. The brokerage emphasized that margin improvement after H2FY26 will be driven by premiumization strategies, strong sales momentum in B2C and food categories, and revival of growth in value-added hair oils.
Strategic Business Diversification
Marico's ongoing transformation toward reduced commodity dependence shows promising results. The company's food segment grew by 12% and crossed ₹1,100 crore in annualized revenue. Combined, foods and premium personal care segments accounted for 22% of India revenue in H1FY26, with expectations to reach 25% by FY27.
The company's acquired brand, Beardo, is approaching double-digit EBITDA margins, indicating successful integration and growth potential in the premium personal care space.
Despite current challenges, Marico's stock has delivered 23% returns over the past year and currently trades at approximately 45 times FY27 earnings according to Bloomberg data. With valuations already reflecting optimistic expectations, the company's margin trajectory remains the critical variable for future stock performance.
