Summary
Marico Limited - Q3 FY26 Earnings Call Summary Tuesday, January 27, 2026 5:00 PM
Event Participants
Executives 2 Pawan Agrawal (Group CFO & CEO-International Business), Saugata Gupta (MD & CEO)
Analysts 7 Abneesh Roy (Nuvama), Harit Kapoor (Investec), Mihir Shah (Nomura), Nihal Mahesh Jham (HSBC), Percy (IIFL), Prakash Kapadia (Kapadia Financial Services), Sheela Rathi (Morgan Stanley)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Volume Growth (India) | Positive | Sequential improvement despite elevated pricing; ml-age reduction impacted headline numbers by ~3%. |
| Market Share (India) | 95%+ of business | Gaining or sustaining market share; 80% of portfolio gaining/sustaining penetration on MAT basis. |
| VAHO Value Share | ~30% | Reached all-time high on MAT basis; value-volume gap narrowed from 10% to 5%. |
| VAHO Growth | High-teens % | Two-year CAGR stands at 14% excluding Shanti Amla brand. |
| Foods Revenue (ARR) | ₹1,000 crores | Portfolio scaling up; focus shifted to stabilization and profitability in the organic segment. |
| Digital-First ARR | ₹1,000+ crores | On track to reach 2.5x of FY24 ARR by next year. |
| Premium Personal Care ARR | ₹350+ crores | Expected exit run-rate for FY26; portfolio grew in double digits. |
| International Growth | Double-digit % | Bangladesh grew 8% despite unrest; Vietnam and South Africa saw double-digit constant currency growth. |
| Copra Prices | -25% to -30% | Correction from peak levels; management waiting for further visibility before passing on price cuts. |
Geographic & Segment Commentary
- Bangladesh: Demonstrated resilience with 8% growth despite political unrest in August; growth led by steady core business and scale-up of new categories like shampoos.
- Vietnam & South Africa: Delivered double-digit constant currency growth following successful targeted recovery initiatives and a bounce-back in demand.
- India Value-Added Hair Oils (VAHO): Strategic shift from BTL to ATL and focus on mid-to-premium segments (Jasmine, Aloe, Hair & Care) drove value share to 30%.
- Saffola Edible Oil: Soft quarter due to elevated pricing environment and intentional sacrifice of low-margin volumes in certain packs and channels.
Company-Specific & Strategic Commentary
- Project SETU: Distribution initiative has reached 30% coverage; focused on converting indirect to direct rural reach and expanding into urban specialty channels (chemist/cosmetic).
- 4700BC Acquisition: Strategic investment in gourmet snacking (₹140 crore ARR) to fill the gap between mass health (Saffola) and clean label (True Elements); targeting 3x growth in 3 years.
- GST Rate Rationalization: Management views the shift from 18% to 5% for several categories as “transformative,” expected to drive structural conversion from unbranded to branded products.
- Portfolio Rationalization: Temporarily moderated Foods growth (5% this quarter) by exiting low-margin SKUs like mayo and peanut butter to prioritize profitability.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Operating Profit Growth | Mid-teens % | Driven by easing input costs (Copra) and better product mix (VAHO/Premium). |
| Operating Margin Expansion | +150-200 bps | Focus on margin improvement as pricing growth moderates and VAHO contribution increases. |
| Foods Revenue Growth | 20%-25% CAGR | Includes organic recovery and inorganic contribution from 4700BC. |
| Digital Portfolio Margins | Double-digit EBITDA | Target timeframe set for the end of FY27. |
| Parachute Pricing | Single price cut (Q1 FY27) | Management prefers one definitive cut over multiple small steps to maintain trade rhythm. |
Risks & Constraints
| Risk | Context |
|---|---|
| Copra Price Volatility | While currently down 30% from peak, management is cautious about taking immediate price cuts until the new crop trajectory is clear in March-April. |
| Geopolitical/Macro | Continuous monitoring of Bangladesh is required due to macroeconomic uncertainties, though the business has remained resilient thus far. |
| Execution Risk in Snacking | Moving into gourmet impulse snacking (4700BC) requires a different GTM strategy compared to traditional core staples. |
Q&A Highlights
Acquisition Strategy (4700BC)
- Question: What is the rationale for entering gourmet snacking and the profitability outlook? (Abneesh Roy)
- Answer: It fills a portfolio gap for “better-for-you” indulgent snacking. The brand has higher gross margins than Marico’s existing food business and significant synergies in e-commerce/modern trade (Saugata Gupta/Pawan Agrawal).
VAHO Turnaround
- Question: What is driving the sharp growth in hair oils and is it sustainable? (Mihir Shah)
- Answer: Growth is driven by Project SETU and shifting resources from BTL to ATL. Management expects sustained double-digit value growth as the value-volume share gap continues to close (Saugata Gupta).
Parachute Pricing & Margins
- Question: Will deflation in Copra lead to revenue challenges or margin gains? (Percy/Mihir Shah)
- Answer: Marico took only 60% price hikes against 100% inflation; thus, they are comfortable with current premiums. One-time price cuts will likely happen in Q1 FY27, supporting mid-teen operating profit growth (Pawan Agrawal/Saugata Gupta).
Foods Portfolio Performance
- Question: Why has food growth moderated to 5% and when will it recover? (Harit Kapoor/Percy)
- Answer: Deliberate rationalization of unprofitable SKUs and channels. Organic growth is expected to return to double digits within 1-2 quarters (Saugata Gupta).
Key Takeaway
Marico delivered a resilient Q3 FY26, characterized by a sharp turnaround in the Value-Added Hair Oils (VAHO) segment, which reached a record 30% value share, and robust double-digit growth in international markets. While total volume growth was tempered by high absolute pricing in the core Parachute portfolio and a deliberate rationalization of unprofitable SKUs in the Foods business (holding growth to 5%), the underlying fundamentals remain strong. The company is pivoting toward “purposeful acceleration” through Project SETU, which has already expanded direct reach significantly. Strategically, the acquisition of 4700BC expands the Total Addressable Market (TAM) into gourmet snacking, complementing the ₹1,000 crore Digital-First portfolio. Looking ahead, management expects to leverage a 25-30% correction in copra prices to drive mid-teen operating profit growth and 150-200 bps margin expansion, targeting a return to 20-25% growth in the Foods segment by next year.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: