Marico Share Price Target at Rs 743: Prabhudas Lilladher
Prabhudas Lilladher maintains its “Accumulate” CALL on Marico Limited, highlighting observable margin headwinds but setting an aspirational target price of Rs743, up from Rs718. Key factors include robust revenue momentum, segmental volume recovery, and strategic diversification, even as sharp copra price inflation compresses margins near term. The report underscores Marico’s resilience through innovation, portfolio expansion, and aggressive pricing maneuvers, with projected double-digit profit CAGR through FY28. Investors are advised to watch for a margin rebound post-2H26 as new growth engines fire.
Prabhudas Lilladher Research (PL) Retains Accumulate on Marico, Raises Target to Rs743
Prabhudas Lilladher reiterates its “Accumulate” stance on Marico, lifting the target price to Rs743 per share, reflecting confidence in the consumer goods behemoth’s ability to navigate commodity volatility through astute pricing and business model innovation. Marico’s recent earnings reflect impressive resilience, with revenue growth of 23.3% YoY to Rs32.6bn and 9% volume uptick led by strategic price increases and product launches. Despite current market volatility, the stock’s levels point to Rs745 (52-week high) and Rs578 (52-week low). The recommendation is predicated on margin recovery potential post-2H26 and robust performance in digital-first and premium segments.
Topline Resiliency Amidst Margin Challenges
The Q1FY26 print underscores Marico’s revenue ascendancy but reveals near-term margin compression due to unprecedented copra inflation. Sales surged 23.3% YoY, domestic volume grew 9%, and the international business (IBD) posted 19% constant currency growth. However, gross margins eroded by 533bps YoY to 46.9% as copra prices soared by 107% YoY. EBITDA margins contracted by 359bps YoY to 20.1%, reflecting input cost headwinds despite rigorous price actions and operational efficiency drives.
Pricing Power and Portfolio Premiumization
To counter the copra super-cycle, Marico executed cumulative price hikes of approximately 60% across its flagship Parachute brand. While Parachute volume declined by 1% as higher retail prices dampened demand, the premium Personal Care and Value-Added Hair Oil (VAHO) categories flourished. VAHO recaptured 150bps in market share on a moving annual total (MAT) basis, and digital-first verticals like Beardo and Plix delivered double-digit EBITDA margins and rapid scale. The foods segment, meanwhile, is tracking a 25%+ CAGR, with expectations for the exit annual recurring revenue in FY27 to be around 2.5x FY24.
Segmental Performance: Diversification and Digital
Growth drivers expanded beyond traditional categories, as Marico’s foods, personal care, and digital consumer businesses aggressively scaled. Premium Personal Care achieved an ARR of Rs3bn+, led by growth in serums and male grooming. Digital-first brands surged, reaching Rs8.5bn+ in ARR. Ad spends rose by 25% YoY, emphasizing high-growth brands. Rural distribution outpaced urban, and innovations in foods continued to meet aggressive targets. The international business enjoyed broad-based growth, with MENA (42%) and Bangladesh (17%) outperforming, albeit tempered by currency volatility.
Financial Highlights and Key Ratios
| Metric | FY25 | FY26E | FY27E |
|---|---|---|---|
| Sales (Rs m) | 1,08,310 | 1,31,459 | 1,36,266 |
| EBITDA (Rs m) | 21,389 | 23,443 | 27,183 |
| EBITDA Margin (%) | 19.7 | 17.8 | 19.9 |
| PAT (Rs m) | 15,840 | 17,208 | 19,898 |
| EPS (Rs) | 12.3 | 13.3 | 15.4 |
| RoE (%) | 40.6 | 41.4 | 43.8 |
| P/E (x) | 58.9 | 54.2 | 46.9 |
Margin pressures remain a key concern, but cash generation is robust (projected FY27 FCF: Rs20,256m). Management targets double-digit EPS CAGR (12% over FY25-27) and expects significant profit growth post-margin normalization.
Strategic Outlook: Commodity Cycles and Margin Rebound
Copra prices are the central risk: up sharply YoY but showing the early signs of peaking, with a 12% drop from recent highs. Management guidance anticipates margin recovery post-2H26 as raw material pressures abate. Innovation-led growth, ongoing cost optimizations, and category expansion are primed to improve profitability. International diversification minimizes single-market risks, especially with Bangladesh and MENA driving outsized gains, and portfolio realignment away from lagging geographies in play.
Investor Takeaways: Levels and Recommendations
The stock is currently hovering near Rs723 (CMP), with a technical ceiling around Rs745 and a base near Rs578. The revised TP of Rs743 underlines a conservative but constructive view, with an “Accumulate” reiteration targeting a medium-term upside. Investors with a moderate risk tolerance are advised to accumulate, monitoring for margin stabilization and breakouts above resistance. Downside risk appears limited to broader commodity shocks or a failure to execute on margin recovery as copra prices normalize.
Conclusion: Staging for a Comeback
Marico stands at an inflection point: short-term margin turbulence is real, but the levers for long-term growth and profit expansion are firmly in place. PL’s analysis points to strong execution, portfolio breadth, and channel innovation underpinning the “Accumulate” call. Patient investors stand to benefit as margin normalization unfolds and new S-curve opportunities in foods and digital-first brands play out. Tight watch on commodity developments and earnings momentum is warranted as catalysts for the next leg up in share price performance.
