Motilal Oswal projects double-digit revenue growth for Marico in FY27, driven by a recovery in the core Parachute coconut oil business. The outlook hinges on favorable copra price cycles and expansion in the Foods and premium hair oil segments. Investors are weighing this growth forecast against the company’s current valuation multiples and competitive pressures in the FMCG sector.
Marico is entering fiscal year 2027 with expectations for stronger volume and revenue growth, supported by a recovery in its flagship Parachute oil brand. Recent reports from brokerage firm Motilal Oswal indicate that a significant correction in copra prices—which have fallen by about 45% from their previous highs—has allowed the company to lower product prices. This strategy appears to have successfully boosted volume growth in the first quarter of FY27.
Segment Performance and Strategy
Beyond the core coconut oil business, Marico’s growth strategy focuses on its Value-Added Hair Oils (VAHO) and Foods segments. The VAHO category has shown consistent momentum, reporting growth near 20% in the previous fiscal year, a trend the company aims to sustain. In the Saffola oils business, management has indicated a shift in priority toward maintaining and improving profit margins. These efforts are part of a broader push to diversify revenue away from traditional segments and toward higher-growth areas like digital brands and specialized food products.
Financial Outlook and Risks
Projections for the FY26 to FY28 period suggest a compound annual growth rate of 13% in revenue and 21% in EBITDA. While these figures point to healthy expansion, investors should remain mindful of the risks inherent in the FMCG sector. The company's performance is sensitive to the volatile costs of raw materials like copra and other edible oils. If these costs rise unexpectedly, it could put pressure on the profit margins that the company is currently working to stabilize. Furthermore, the company faces stiff competition from both large multinational players and smaller, agile regional brands that are increasingly active in the hair care and healthy foods space.
Investor Monitorables
For investors, the most important areas to track in upcoming quarters include the actual volume growth in the India business and the sustainability of the profit margins in the Saffola portfolio. While the recent price reductions have supported volume, the ability of the company to maintain its market share against competitors while balancing these input costs will be a critical indicator of its operational health. Investors may also look for management updates regarding the scale-up of newer digital-first brands, which represent the company’s efforts to modernize its product mix and reach younger consumer demographics.