Marico shares up 5% post Q4; will this FMCG stock sustain its outperformance over peers?

Marico Ltd shares climbed 5 per cent in Monday's trade as its top line growth in the March quarter met analyst estimates. Profitability, on the other hand, was impacted by sharp inflation in commodity prices and increase in advertising and promotion expenses. While rising input costs may impact in the next two quarters, the margin outlook for H2FY26 remains positive, stock analysts said as they retained their 'Buy' on the stock. 

Following the development, the FMCG stock rose 5.41 per cent to hit a high of Rs 735.25. It was later trading at Rs 722.40, up 3.57 per cent. The stock has rallied 36 per cent in the past one year against a 4.8 per cent rise in the BSE FMCG index. Hindustan Unilever rose 4 per cent while ITC was flat during the same period.  

MOFSL said the Marico stock was the top performer among peers in FY25 with over 35 per cent return. With the growth trajectory continuing, it sees the rich valuation to sustain. The brokerage has suggested 'Buy' rating on the stock with a target of Rs 800.

"Marico has created a competitive execution edge in enhancing its portfolio for youth and thus leveraging its ‘creeping acquisition’ strategy, where the Founder stays with a brand for a longer period (refer to: Organic not enough; thrust on M&A to drive growth). Given better earnings outlook, we upgrade Marico to Buy. Its current CEO’s term has been extended for another two years (till Mar-28), on better execution," Emkay Global said.

JM Financial said Marico’s 4QFY25 earnings print was largely inline with its pre-quarter update. The domestic revenue growth of 20 per cent with Q4 volume growth of 7 per cent are likely to be best in class among the staples peers, it said noting that the latter was entirely driven by new franchises.

The Marico management has reiterated its guidance of double digit revenue growth for FY26E - with strong pricing growth continuing in 1H along with sustained momentum in Foods & PC portfolio.

JM Financial said it does not see a challenge in achieving the same.

"Profitability is likely to be under pressure. Having said that, Marico has navigated inflation cycle well by demonstrating strong pricing power in core & also has other margin levers to cushion the impact on profitability. We continue to like Marico within our HPC coverage," it said while suggesting a target of Rs 765  on relatively better visibility," it said.

Nuvama said given that a correction in copra prices is awaited, it is cutting its FY26E EPS
estimate by 3 per cent. It rollover its estimates to FY27E and suggested a fresh target of Rs 815 against Rs 785 earlier.

"Over the long term, we expect Marico to sustain double-digit growth, driven by the scaling up of its emerging categories (Foods and Premium Personal Care businesses) and steady growth in its core categories (CNO and Saffola Edible oil) supported by distribution expansion," ICICI Securities said while suggesting a target of Rs 740 on the stock.