Marico's Volume Soars 8% to 7-Year High, But Margin Squeeze Hits Profit

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AuthorVihaan Mehta|Published at:
Marico's Volume Soars 8% to 7-Year High, But Margin Squeeze Hits Profit
Overview

Marico Consumer Care reported its strongest volume growth in seven years, with an 8% rise in FY26. However, net profit grew a slower 9% to ₹1,813 crore, trailing a robust 26% revenue jump to ₹13,611 crore. This divergence signals significant margin pressure, primarily driven by a sharp increase in material costs, particularly copra inflation, which impacted EBITDA margins by 265 basis points.

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Margin Pressure Amidst Demand Surge

The divergence between Marico's robust revenue and volume expansion and its slower net profit growth stems directly from a sharp increase in material costs. The cost of materials consumed surged to ₹6,197 crore from ₹4,572 crore, heavily influenced by copra inflation. This cost escalation compressed EBITDA margins to 17.1% from 19.7% in the previous fiscal year, despite a 15% rise in advertising and promotion spends to ₹1,300 crore.

Category Performance and Strategic Shifts

While the Parachute coconut oil franchise experienced muted volume growth due to elevated copra prices, Marico has initiated selective price cuts of around 10% in non-point-of-price packs. Conversely, value-added hair oils (VAHO) emerged as a key driver, posting over 20% volume growth and market share gains. The foods portfolio crossed ₹1,000 crore in annual revenue, with Saffola edible oils showing steady mid-single-digit growth. Strategic acquisitions and stake increases in digital-first wellness brands like Cosmix, 4700BC, Plix, and True Elements signal a move away from commodity-linked businesses. These legacy categories now represent 63% of the portfolio, down from 73% in FY20, with a target of 50% by FY30.

Outlook and Margin Recovery Prospects

Marico anticipates a gradual volume pick-up from the next quarter, buoyed by easing consumer prices and strong brand equity. Management projects a potential margin recovery of approximately 150 basis points in FY27, driven by softer copra prices, operating leverage, and cost discipline. Investments in AI and supply chain capabilities are also expected to enhance efficiency. The company is confident in sustaining high single-digit volume growth and achieving double-digit revenue growth, targeting over ₹15,000 crore in FY27 and surpassing ₹20,000 crore by FY30. A final dividend of ₹4 per share has been recommended.

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