ICICI Direct has initiated coverage on FMCG major Marico Limited with a BUY call, highlighting a 12-month target price of Rs 870 against a current market price of Rs 736, implying an upside potential of about 18 percent for investors willing to ride a recovery in core categories and the rapid scale-up of new-age businesses. The brokerage underlines Marico’s strong franchise in hair oil and health foods, its disciplined capital allocation, and an improving commodity cycle as key tailwinds for earnings compounding over the next three years. With double-digit revenue and profit growth projected through FY28, the stock is being positioned as a quality FMCG compounder with rerating potential as margins normalise and newer engines of growth reach scale.​

ICICI Direct’s Investment Call

BUY rating with attractive upside
ICICI Direct’s retail research arm has assigned a BUY rating to Marico Ltd., setting a 12-month fair value target of Rs 870 per share versus the prevailing price of Rs 736, translating into an estimated upside of roughly 18 percent for long-term investors. The stock has been valued at 50 times FY27 estimated earnings per share of Rs 17.4, reflecting confidence in Marico’s ability to sustain healthy growth and maintain superior return ratios relative to peers.​

Return profile and time horizon
The recommendation falls in ICICI Direct’s “Buy: greater than 15 percent” return bucket on a performance horizon of up to two years, signalling an expectation of steady compounding rather than a short-term trading idea. The house projects revenue and profit after tax to grow at compound annual growth rates of around 15 percent and 17 percent, respectively, during FY25–FY28, underpinned by both core and emerging businesses.​

Business Snapshot and Franchise Strength

Leading FMCG platform
Marico is positioned as one of India’s prominent fast-moving consumer goods companies with a meaningful presence in beauty, hair care and wellness across domestic and international markets. Its portfolio houses well-entrenched brands such as Parachute in coconut oil, Saffola in edible oils and health foods, and Livon in hair serums, helping the company cross annual revenues of about Rs 10,500 crore in FY25.​

Diversified domestic and overseas presence
The company generates sales from both India and key international geographies, where it is increasing the share of premium offerings within its product mix. This diversified footprint, coupled with strong brand equity, provides resilience against localized demand shocks and supports a more balanced growth trajectory.​

Growth Engine: Core Portfolio Recovery

Double-digit revenue acceleration ahead
Marico is expected to post double-digit revenue growth in FY26, with management guiding that volume growth in the second half of FY26 will outpace the roughly 8 percent volume expansion seen in the first half. The anticipated pick-up is linked to a correction in copra prices and stabilisation of Parachute pricing, which together should drive a gradual recovery in volumes for the flagship coconut oil franchise.​

Core portfolio compounding at 10 percent
The core portfolio, comprising Parachute and value-added hair oils, is projected to grow at a compound annual growth rate of around 10 percent over FY25–FY28, aided by both volume growth and premiumisation. The value-added hair oils segment has already reverted to double-digit growth, offering incremental support to the core engine and enhancing overall portfolio quality.​

New-Age Businesses: Foods and Digital Brands

Foods business regaining momentum
Marico’s foods portfolio is expected to revert to a higher growth trajectory from the fourth quarter of FY26 and is projected to grow at more than 25 percent CAGR, reaching roughly eight times its FY20 scale by FY27. This is being driven by distribution expansion and consistent innovation, while gross margins in the foods vertical have already expanded by about 1,000 basis points over the past two years, with further improvement anticipated as scale builds.​

Digital-first brands scaling rapidly
The company’s digital-first brands, which currently run at an annual revenue rate of around Rs 1,000 crore, are expected to grow by about 2.5 times by FY27 on the back of strong consumer traction. Management expects EBITDA margins in the digital-first portfolio to reach double digits by FY27, with Beardo already nearing that threshold and Plix delivering single-digit margins with room for rapid scale-up.​

Margin Outlook and Commodity Tailwinds

EBITDA margin recovery trajectory
Marico’s EBITDA margins came under pressure due to a sharp, 113 percent year-on-year spike in copra prices during the second quarter of FY26. However, copra prices have already declined about 15 percent from their peak, and a fresh crop flush expected from March 2026 is likely to ease cost pressures by the fourth quarter of FY26, enabling a return to double-digit EBITDA growth in the second half of FY26.​

200 bps margin expansion by FY27
The brokerage expects EBITDA margins to expand by roughly 200 basis points year on year in FY27, driven by a more favourable commodity environment and a richer portfolio mix tilted toward higher-margin foods and digital brands. This margin uplift, combined with steady topline growth, is projected to deliver mid-teens earnings growth over the medium term.​

Financial Trajectory and Valuation Metrics

Key financial projections
Revenues are estimated to rise from Rs 10,831 crore in FY25 to Rs 16,276 crore by FY28, implying around 14.5 percent CAGR over FY25–FY28. Over the same period, EBITDA is expected to grow from Rs 2,139 crore to Rs 3,398 crore, corresponding to a near 16.7 percent CAGR, while adjusted profit after tax is projected to move from Rs 1,658 crore to Rs 2,619 crore, translating into about 16.5 percent CAGR.​

Return ratios and valuation comfort
Return on equity is forecast to improve from 42.5 percent in FY25 to around 46.5 percent in FY27, while return on capital employed is set to increase from 43.2 percent to more than 50 percent, underscoring efficient capital deployment. On the valuation side, the price-to-earnings multiple is projected to compress from roughly 57 times FY25 earnings to about 36 times FY28 earnings as earnings compound faster than the stock price assumption, creating room for investors to benefit from both growth and potential rerating.​

Key Levels and Trading/Investment Strategy

Suggested levels for investors
With the current market price around Rs 736 and a fundamental target of Rs 870, investors are being advised to accumulate the stock on declines, with an eye on a 12–24 month holding period. While the report does not stipulate explicit technical levels, a pragmatic strategy for investors could involve staggered buying near any meaningful corrections below the prevailing price, keeping the Rs 870 target as the primary milestone and reassessing if fundamentals or commodity trends deviate materially.​

Risk–reward tilt
Given the projected improvement in margins, double-digit revenue growth and strong return ratios, the risk–reward profile currently appears skewed in favour of long-only investors rather than short-term traders. That said, investors should monitor volatility in copra and vegetable oil prices, as well as competitive intensity in key categories, which remain the principal variables that could disrupt the expected earnings trajectory.​

Risks to the Positive Thesis

Demand, input cost and competition risks
ICICI Direct flags three primary risks: a sustained slowdown in urban consumption, prolonged inflationary pressure in copra and vegetable oil, and escalating competitive intensity in core categories. Any combination of these factors could cap pricing power, compress margins or delay the anticipated recovery in key brands, thereby tempering both growth and valuation multiples.