Marico Q2 Results Review - Improving Growth Outlook; Stable Urban; Upgrade To 'Buy': Systematix

Systematix Research Report

With most consumer companies flagging strained urban demand, ~50- 55% of Marico Ltd.’s India portfolio – foods, PPC, digital-first, premium Saffola edible oils – caters to upper/ upper-middle class urban consumer segments, relatively less impacted by income stress and high retail inflation.

This enables high pricing power and superior growth in key brands. Parachute sustained volume growth (+4% in Q2) despite a recent price hike; the next hike of 4% (due to copra inflation) should also likely have a moderate impact on volume growth.

In Saffola edible oil, despite the high 15% price increase, the brand’s premium consumer positioning should limit volume impact, leading to better realizations. In value added hair oil, interventions in trade spends and pricing could lead to a turnaround in value growth in the short term.

The foods/ PPC/ digital-first businesses should continue to grow at 20%+, increasing their sales salience medium-term (20% currently). International business should maintain stable growth. Direct reach expansion under Project SETU should expand portfolio crossselling opportunities, aiding volume growth.

While margins could remain subdued near-term, we expect a revival over FY26-27E driven by-

1. pricing power,

2. better mix and

3. higher direct reach efficiencies.

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