Shares of Marico Ltd. climbed on Monday following the release of its Q2 FY27 business update, which highlighted resilient domestic demand and robust volume growth. Brokerage firm Nuvama Institutional Equities reiterated its 'Buy' rating, projecting significant upside for the FMCG major.
Strong Q2 Performance Driven by Key Brands
Marico's Q2 FY27 update revealed a dynamic yet volatile operating environment. Despite this, its India business achieved double-digit underlying volume growth. Notably, Parachute Coconut Oil reported early-teens volume growth, while Value Added Hair Oils (VAHO) sustained growth in the twenties for the sixth consecutive quarter, bolstered by strategic investments and expanded direct reach.
The company also noted mid-single-digit price-led growth for Saffola Oils, although volumes declined as Marico prioritized profitability and rationalized certain variants.
Nuvama's Optimistic Outlook and Price Target
Nuvama Institutional Equities characterized Marico's Q2 FY27 performance as strong, with consolidated revenue and EBITDA meeting expectations and domestic volume growth slightly exceeding estimates. The brokerage anticipates overall volumes to expand by approximately 10% year-on-year, primarily fueled by Parachute's projected 14% YoY volume increase—a 21-quarter high.
Nuvama expects VAHO revenue to surge by 23% year-on-year and forecasts Marico's international business to grow around 15% YoY in constant-currency terms. The firm projects a strong improvement in gross margin year-on-year and operating profit growth in the mid-twenties, driven by a favorable portfolio mix and easing copra prices.
Based on this outlook, Nuvama maintained its 'Buy' rating with a target price of Rs 1,015, suggesting a nearly 30% upside from the stock's reference price of Rs 781. Marico shares reacted positively, reaching a high of Rs 800 before closing 1.35% higher at Rs 790.65.
Marico's management expects consolidated revenue to achieve double-digit growth, supported by its core, digital, and international segments. While crude-linked derivative costs have risen, copra prices remain significantly below peak levels, contributing to the positive margin outlook.