Marico shares at Rs 865? Nuvama says buy after Q3 update

Nuvama in a fresh note on Marico Ltd said its Decemeber quarter (Q3 FY26) business update came in slightly ahead of its preview estimates on revenue and Ebitda, while volume growth of 8 per cent year-on-year (YoY) was broadly in line with expectations. Following the update, the brokerage said it now expected Marico’s revenue and Ebitda to grow about 27 per cent and 10 per cent, respectively, on a year-on-year basis.

Nuvama said Parachute volumes are likely to decline marginally, down about 2 per cent YoY, but would remain positive on a normalised basis after adjusting for ml-age reductions. It said the value-added hair oils portfolio is expected to expand about 22 per cent year on year, higher than its earlier estimate of 18 per cent. The international business is seen rising about 22 per cent year on year, compared with an earlier estimate of 20 per cent.

The brokerage said Saffola edible oils is likely to report a muted quarter as earlier price hikes is anniversarised, while the foods portfolio remained benign, though improvement was expected over the next two quarters. Gross margins are seen improving sequentially, supported by easing copra prices. Nuvama retained its 'Buy' rating on the stock with a target price of Rs 865.

On the operating outlook, Nuvama said volume-led growth momentum had sustained. The domestic business was expected to expand in the high twenties, with volumes growing in the high single digits. Ebitda growth was seen in double digits. International business growth was expected in the early twenties in constant currency terms, led by Bangladesh, while Vietnam and South Africa were likely to return to double-digit growth.

Nuvama said Parachute volumes were expected to decline modestly due to elevated input costs and price hikes, though volumes remained positive on a normalised basis. The value-added hair oils portfolio was expected to grow in the twenties, while the foods business was likely to remain benign. Premium and personal care segments, including digital-first brands, were expected to continue scaling up.

For Q3 FY26, Nuvama said consolidated revenue is expected to grow about 27 per cent YoY, driven by domestic pricing growth of about 19 per cent and volume growth of around 8 per cent, led by digital channels and the VAHO portfolio. Consolidated Ebitda was expected to grow about 10 per cent year on year.

Parachute sales were expected to rise sharply on a low base, even as volumes edged down about 2 per cent year on year. Nuvama said there were no price cuts in Parachute, while the base included pricing anniversarisation. VAHO growth was expected at about 22 per cent year on year. Saffola edible oils volumes and value were expected to remain flat year on year, while the foods business was seen posting modest growth, supported by strong performance in digital-first brands.

The international business was expected to grow about 22 per cent year on year in constant currency terms. Nuvama said gross and Ebitda margins were likely to contract year on year but improve sequentially, aided by a roughly 30 per cent correction in copra prices from their peak. Advertising and promotion spending was estimated at about 9.5 per cent of revenue.

Meanwhile, Nomura India suggested a target price of Rs 875 on Marico, based on a P/E of 50 times December 2027 EPS. "We maintain our Buy rating and top-pick status, and forecast a 15 per cent EPS CAGR over FY26-28F. Key risks: (1) higher-than-expected volume pressure due to price hikes; (2) sharper-than-expected decline in copra prices in 2HFY26F; and (3) weaker-than-expected growth in its new/growth portfolios," it said.