Marico has growth in place. Now, profit margin needs to improve.

Demand trends in Q1 weren’t particularly thrilling—rural markets saw improving trends, while urban sentiment was steady. This means Marico was hardly immune to old pressures in Q1. Parachute saw a marginal dip in volumes amid sharp inflationary pressures and pricing environment. The company took another round of price hikes in June and made grammage changes. After adjusting for pack size, unit sales rose.

Saffola Oils’revenue growth was in the high twenties, aided bymid-single-digit volume gains, bouncing back from a weak Q4. The company passed on the benefit of lower import duties, which helped.

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Value-added hair oils also gained pace, reportinglow double-digit revenue growth after a flat Q4. A pivot toward brand-building and distribution via project SETU seems to be making a difference. Marico’s newer bets, in foods and premium personal care, continue to scale with profitability holding up.

Overall, Q1 consolidated revenue rose in the early twenties, similar to Q4. International markets grew in the high teens on a constant currency basis, with sequential improvement in Bangladesh (high-teen constant currency).

Rough patch

However, the profitmargin outlook has worsened.Copra prices rose again in Q1, with unseasonal rainfall adding to the woes of elevated input costs.Vegetable oil prices softenedfollowing the import duty cut, andcrude derivatives held steady, but the overall cost mix hasn’t provided enough relief, keeping gross margin under pressure. Further, brand investments spending toward core franchises and newer categories has continued. The trade-off is that near-term operating profit growth is expected to remain modest.

“We now reckon consolidated revenue/Ebitda shall grow 22.4% and 3.9% year-on-year (versus initial expectation of 21.5% and 3.1% on-year)," said a Nuvama Research report dated 3 July. Ebitda is short for earnings before interest, taxes, depreciation, and amortization.

Marico,which earlier expected margin recovery by Q2, now sees it only in the second half of FY26 (H2FY26). Note that the Ebitdamargin has declined on-year for the past three consecutive quarters. Thus, FY25 Ebitda margin contracted about 130 basis points to 19.7%.

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Marico’s management expects gradual improvement through the rest of FY26 supported by a favourable monsoon, policy tailwinds and eventually softer inflation. The full-year target of double-digit revenue growth stays unchanged.

Analysts from Nomuraexpect sales to grow in the high teens in H1FY26 and in double digits in H2FY26 as they bake in price cuts in Parachute for the second half, with moderation in copra prices

To be sure, valuations of the Marico stock are a sore spot. The shares trade at around 44 times FY27 estimated earnings, showed Bloomberg data, suggesting there’s little margin for error. While growth appears to be in place, investors will await meaningful signs of improvement in profitability.

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According to Nomura, key risks for Marico are: higher-than-expected volume pressure due to price hikes; sharper-than-expected decline in copra prices in H2FY26; and weaker-than-expected growth in its new/growth portfolio.