Motilal Oswal Financial Services has reiterated a BUY rating on Marico, assigning a target price of Rs 900, implying an upside of approximately 22% from the current market price of Rs 736. The brokerage highlights Marico’s resilience amid geopolitical volatility, supported by favorable raw material dynamics—particularly declining copra prices. Strategic diversification into foods, premium personal care, and digital-first brands is accelerating growth. With strong margin expansion visibility, robust international performance, and disciplined capital allocation, Marico stands out as a structurally strong FMCG play poised for sustained earnings growth and shareholder value creation.

Motilal Oswal Reaffirms BUY Call on Marico

Motilal Oswal Financial Services maintains a BUY recommendation on Marico with a target price of Rs 900. The valuation is anchored on a forward multiple of 50x FY28 estimated earnings, reflecting confidence in the company’s long-term growth trajectory and margin expansion outlook.

At the current market price of Rs 736, the stock presents a compelling upside opportunity, supported by improving fundamentals and favorable macro tailwinds.

Stock Performance and Key Metrics Snapshot

Marico has delivered strong shareholder returns, gaining nearly 50% over the past two years. This outperformance among FMCG peers underscores investor confidence in its execution capabilities and strategic pivot toward high-growth segments.

Key financial highlights include:

Market capitalization: ~Rs 955 billion
FY26E Revenue: Rs 136.8 billion
FY28E Revenue: Rs 171.2 billion
FY28E EPS: Rs 18.2
Return on Equity (FY28E): ~49.8%

These metrics reinforce Marico’s positioning as a high-return, cash-generative consumer franchise.

Resilience Amid Geopolitical Uncertainty

Marico remains relatively insulated from global geopolitical disruptions compared to FMCG peers. This resilience is largely attributable to its raw material composition. Copra, which constitutes nearly 50% of the input basket, has witnessed a sharp correction of approximately 40% from peak levels.

In contrast, crude-linked inputs account for only 18–20%, limiting exposure to global oil price volatility. This unique mix positions Marico favorably in an inflationary environment.

Margin Expansion Backed by Cost Tailwinds

EBITDA margins are expected to expand by 150–200 basis points in FY27. The easing of copra prices, combined with an increasing contribution from premium products, is likely to drive profitability improvement.

After experiencing margin pressure due to input inflation, Marico is now entering a phase of margin recovery, with projections indicating:

FY26 EBITDA margin: 17.1%
FY27 EBITDA margin: 18.8%
FY28 EBITDA margin: 19.1%

This steady expansion highlights strong operating leverage and pricing discipline.

Core Business Dynamics: Stability with Recovery Potential

Parachute coconut oil segment is poised for volume recovery. While recent quarters saw muted volume growth due to elevated prices, value growth remained strong due to pricing actions. As copra prices soften, price corrections are expected to stimulate demand revival.

Saffola edible oil segment remains subdued but stable. Competitive intensity and consumer downtrading have impacted performance, though premium positioning is expected to aid gradual recovery.

Value-added hair oil segment continues to outperform. With ~29% YoY growth and market share gains, this segment remains a key growth driver, supported by premiumization and rural expansion initiatives.

Transformation into a Digital and Premium FMCG Player

Marico is undergoing a structural transformation beyond traditional FMCG categories. The company is aggressively scaling its foods and digital-first portfolios, targeting a 20–25% CAGR in these segments.

The contribution from these segments is expected to rise to ~33% of domestic revenue, up from ~25% currently, reflecting a clear shift toward high-margin and high-growth categories.

Foods Business: A Scalable Growth Engine

The foods segment is emerging as a long-term growth pillar. Despite near-term moderation due to portfolio rationalization, the business has already crossed Rs 9 billion in revenue and is expected to scale significantly over the coming years.

Key brands such as Saffola Oats and True Elements continue to gain traction, while recent acquisitions like 4700BC and Cosmix are expected to accelerate growth.

Digital & D2C Portfolio Driving Premiumization

Digital-first brands are witnessing exponential growth. Brands like Beardo and Plix have scaled rapidly, benefiting from strong consumer engagement and repeat purchases.

Beardo revenue: ~Rs 3.5 billion (FY26E)
Plix: ~6x growth since FY24
Digital portfolio ARR: Expected to exceed Rs 10 billion

These brands are expected to deliver double-digit EBITDA margins by FY27, further enhancing profitability.

International Business Strengthens Growth Visibility

Marico’s international operations are delivering robust performance. The segment grew approximately 18% in 9MFY26, driven by strong demand across key geographies such as Vietnam and Bangladesh.

Importantly, limited exposure to the MENA region reduces geopolitical risk, ensuring stability in international revenues.

Financial Outlook and Growth Projections

Marico is expected to deliver consistent double-digit growth across key metrics. The brokerage models the following CAGR over FY26–FY28:

Revenue CAGR: ~12%
EBITDA CAGR: ~18%
PAT CAGR: ~16%

This growth trajectory is supported by pricing power, premiumization, and expansion into new categories.

Investment Levels and Target Outlook

Key Levels for Investors:

Current Market Price: Rs 736
Target Price: Rs 900
Upside Potential: ~22%

Valuation Metrics:

FY26 P/E: ~53.9x
FY28 P/E: ~40.5x

The valuation appears justified given the company’s superior return ratios, strong earnings visibility, and structural growth drivers.

Strategic Initiatives Supporting Long-Term Growth

Project SETU is enhancing distribution reach and market penetration. This initiative is expected to significantly strengthen Marico’s presence across India, particularly in general trade channels.

Additionally, strategic acquisitions and portfolio diversification are enabling Marico to build a future-ready business model with reduced reliance on legacy categories.

Bottomline for Investors: A High-Quality FMCG Compounder

Marico stands out as a resilient, forward-looking FMCG player with strong earnings visibility. Its ability to navigate macro uncertainties, coupled with a strategic shift toward premium and digital categories, positions it for sustained growth.