Marico Q3FY26 Preview: Revenue to Surge on Pricing Power, Margin Gains

Strong Q3 Performance Expected for Marico

Fast-moving consumer goods (FMCG) company Marico is set to deliver a robust operating performance for the quarter ending December 2025 (Q3FY26). According to analyst notes from Nomura and JM Financial, the growth is expected to be driven by the company's significant pricing power, improving profit margins, and strong momentum in its value-added and international business segments. This positive outlook emerges even as the broader FMCG sector experiences a relatively stable demand environment, highlighting Marico's market resilience.

Revenue Growth Driven by Pricing Strategy

Analysts project Marico's consolidated revenue to increase in the high twenties year-on-year. Nomura estimates a growth rate of approximately 27%, a significant figure that underscores the company's effective strategies. This growth is particularly noteworthy as it follows a sharp price hike of nearly 25% year-on-year across its portfolio. Despite these price increases, the company's India business is expected to see its volumes grow in the high single digits, an improvement from the 7% growth recorded in the September quarter. This ability to raise prices without significantly impacting consumer demand points to strong brand equity and customer loyalty, especially for its core brands.

Margin Recovery a Key Highlight

A crucial factor in the positive forecast is the anticipated improvement in margins. Consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is expected to grow in the early double digits, with Nomura pegging the year-on-year growth at around 11%. This recovery is primarily attributed to easing input costs. Copra prices, a key raw material for Marico, have corrected by about 30% from their peak levels following the flush season. While copra prices had previously surged by as much as 120%, Marico had implemented price hikes of only around 60%. This gap now provides the company with a buffer, allowing it to benefit from lower raw material costs and expand its margins without needing to immediately reduce product prices.

Performance Across Product Categories

The company's performance is varied across its diverse product portfolio, but overall resilience is the dominant theme.

Parachute Coconut Oil: This flagship brand, which constitutes about 26% of consolidated sales, is expected to report strong value growth of nearly 59% year-on-year. This comes despite a marginal volume decline of around 1%. Marico has strategically managed price hikes by implementing pack-size reductions, a tactic that has helped maintain affordability. After normalizing for these adjustments, management indicated that volumes were positive, a notable improvement from the flat volumes seen in the previous quarter.

Value-Added Hair Oils (VAHO): The VAHO segment, contributing about 14% of sales, has been a positive surprise. It is projected to post sales growth in the twenties, far exceeding initial expectations. Management is confident that this double-digit momentum can be sustained, supported by a focus on mid and premium products, the expansion of its direct distribution network under 'Project SETU', and a favorable GST rate cut on hair oils from 18% to 5%.

Saffola and Foods: The Saffola edible oil brand is expected to see flattish volumes and muted value growth as the impact of previous price changes anniversarises. The foods business, after a period of high growth, had a more subdued quarter. However, management expects growth in this segment to consolidate in FY26 and revive over the next two quarters.

International Business Maintains Momentum

Marico's international operations, which account for roughly 25% of consolidated sales, continue to be a strong growth engine. The segment reported constant currency growth in the early twenties. The Bangladesh business outperformed expectations despite some political instability in the region. Furthermore, the Vietnam and South Africa markets have returned to double-digit growth, thanks to targeted strategic initiatives.

Analyst Outlook and Valuations

Both Nomura and JM Financial remain constructive on Marico's medium-term prospects. They have reiterated their 'Buy' ratings on the stock, with a shared target price of ₹875. This valuation, according to Nomura, places the company at 50 times its estimated December 2027 earnings. Management has also reaffirmed its guidance for double-digit revenue growth for the full fiscal year FY26, citing expectations of easing inflation and improving consumer sentiment.

However, analysts also point to potential risks. These include a sharper-than-expected decline in volumes due to the price hikes, a rapid fall in copra prices that could pressure margins if not managed well, and weaker-than-anticipated growth in the company's newer portfolios. Despite these risks, the consensus is that Marico's proven pricing power, expanding distribution reach, and clear growth targets position it well for sustained earnings growth in the coming years.