Marico delivers bumper Q1, confident of navigating macro headwinds

Marico Ltd delivered one of its strongest quarters in years as easing raw material costs lifted margins and enabled the maker of Parachute coconut oil to hold prices after earlier cuts. Management said it does not expect any further pricing action over the next couple of months as it enters the seasonal off-season and sees no pricing corrections on the cost side.

The company also said it remains confident of navigating the current short-term macroeconomic headwinds.

“Given the fact that we'll now be moving into the offseason in the next couple of months, we don't see any pricing corrections to happen on the cost side, and therefore we do not expect any further pricing action from our end,” the management said during the analyst call on Tuesday.

The comments come after Marico lowered prices as copra costs retreated. Analysts at Nomura Group said in a 25 June report that the company cut prices by about 17% across various consumer packs, translating into an effective price cut of about 10% for the Parachute portfolio after an earlier cumulative price increase of 60%.

In its July quarterly update, Marico said copra prices had corrected about 45% from their peak during the quarter.

Consolidated revenue from operations rose 22.8% year-on-year to ₹3,957 crore in the April-June quarter, while net profit increased 27% to ₹652 crore. The company posted domestic volume growth of 11%, its highest in 20 quarters.

Consolidated Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose 25%, the fastest growth in 28 quarters, while the Ebitda margin expanded 40 basis points year-on-year to 20.7%.

Shares of the company closed 0.68% lower at ₹875 on the National Stock Exchange on Tuesday, while the benchmark Nifty 50 declined 0.64%.

Price cuts in larger packs

Management said the company implemented deeper price cuts in its loyalty packs than in smaller stock-keeping units.

“Some of the loyalty packs were slightly stressed by the inflation, so, we've taken the pricing drops on the loyalty packs, and we hadn't taken in the small and the small packs and the price point packs,” the management said.

Loyalty packs are typically larger or family-sized packs that offer consumers better value per unit and are designed to encourage repeat purchases. By contrast, price-point packs are sold at fixed price points such as ₹5 or ₹10, with manufacturers adjusting grammage rather than price to manage inflation.

Marico is targeting high-teen Ebitda growth for fiscal year 2027 (FY27), implying an expansion of about 140-150 basis points over the previous year.

“Marico appears well placed to deliver healthy earnings growth in FY27, supported by Parachute recovery amid a favorable copra cycle, stable momentum in value-added hair oils, and continued scale-up in foods and digital-first brands,” analysts at Motilal Oswal Financial Services said in a 8 July report.