Marico's Q2 FY26: Navigating Headwinds with Strategic Diversification

Marico Limited, a prominent player in the Indian FMCG sector, has showcased a resilient performance in the second quarter of Fiscal Year 2026, demonstrating strategic agility amidst a dynamic market environment. The company reported a robust 31% year-on-year growth in consolidated revenue from operations, reaching ₹3,482 crore. This impressive top-line expansion was complemented by a 7% increase in EBITDA, which stood at ₹560 crore, reflecting a 16.1% margin. Net profit (PAT), excluding one-off items, grew by 8% to ₹420 crore, underscoring the company's ability to deliver consistent profitability.

The quarter was marked by strong underlying demand in India, contributing to a 7% volume growth despite some transient disruptions. Management highlighted that over 95% of the India business either gained or sustained market share, with over 75% also gaining or sustaining penetration. This indicates effective market strategies and strong brand acceptance. However, the implementation of revised GST rates in September led to temporary trade channel disruptions, impacting Q2 volumes by approximately 2%. This situation has since stabilized, and the company remains optimistic about easing inflation, favorable monsoons, and supportive government policies boosting consumption in both urban and rural markets.

Segmental Performance and Strategic Pivots

While core categories like Parachute Coconut Oil and Saffola Edible Oils experienced flattish volume growth due to unprecedented hyperinflation in Copra prices and an elevated pricing environment, Marico's strategic pivots are yielding positive results. The Value Added Hair Oils (VAHO) segment, for instance, demonstrated accelerated growth, gaining 150 basis points in value market share. This growth was primarily driven by the mid and premium segments of the portfolio, which recorded double-digit volume growth, validating the company's focus on premiumization and brand-building investments.

Marico's diversification into high-growth segments continues to gain traction. The Foods portfolio has crossed an annualized run rate of ₹1100 crore. Although its Q2 growth was 12%, slightly below expectations due to factors like the integration of True Elements, Flipkart accounting adjustments for Plix, and base effects from previous product launches, management is confident of returning to a higher growth trajectory by Q4 FY26. The company's strategy in Foods emphasizes 'fewer, bigger, better, and relevant' products, with new offerings like the Muesli range showing promising green shoots and True Elements expanding its ready-to-eat portfolio with protein bars and Overnight Oats.

Financial Summary

Digital Leadership and International Expansion

The digital-first brands portfolio is emerging as a significant growth engine, exiting Q2 with an annualized run rate exceeding ₹1000 crore. Marico is on track to achieve 2.5 times its FY24 annualized run rate by FY27 and aims for double-digit EBITDA margins in this portfolio by the same year. Brands like Beardo are nearing double-digit EBITDA, while Plix is targeted to achieve low single-digit EBITDA margins. The company is strategically focusing on improving profitability in Plix by optimizing channel investments and leveraging synergies across its digital brands, including common sourcing, logistics, and media buying.

Internationally, Marico's business continues to thrive, recording a robust 20% constant currency growth in Q2 FY26. Bangladesh and the MENA region delivered stellar performances, significantly contributing to this growth. While South Africa experienced a sluggish first half, management anticipates a visible recovery in the second half of the fiscal year. This strong international presence provides a diversified revenue base and contributes significantly to the company's overall growth trajectory.

Strategic Initiatives and Outlook

Marico's Project SETU, a 3-year phased plan from FY24 to FY27, is instrumental in strengthening its distribution fundamentals. The initiative aims to expand direct reach from 1 million outlets in FY24 to 1.5 million in FY27, enhancing market penetration and driving profitable growth. This project has already contributed to a significant improvement in the VAHO growth trajectory, particularly in high-margin segments.

Looking ahead, Marico is confident in its ability to sustain positive growth momentum. The company targets approximately 25% consolidated revenue growth for the current year and aims to deliver double-digit EBITDA growth in the second half. Management expects operating margins to improve by at least 200 basis points next year, driven by easing input costs and continued focus on premiumization and cost management. Marico remains committed to its ambition of reaching ₹20,000 crore in revenue by 2030, underpinned by its resilient operating model and strategic diversification efforts.

Conclusion: Disciplined Execution for Sustainable Growth

Marico's Q2 FY26 performance reflects a company that is not only navigating market challenges with discipline but also strategically positioning itself for long-term, sustainable growth. Through targeted investments in high-growth categories like Foods and Digital-First brands, coupled with robust international expansion and a strong focus on profitability, Marico is building a resilient and diversified portfolio. The management's clear vision and proactive approach to market realities reinforce investor confidence in its future trajectory.