Marico’s Digital Leap: ₹1,000 Cr and Beyond?

Marico’s digital-first brands have crossed the ₹ 1000 cr ARR (Annual Recurring Revenue) mark. The company aims to double its turnover to ₹20,000 cr by 2030, on the back of projected 25% revenue growth in FY26 alone. With this surge in revenue, Marico is marching towards its bold ambition. The company is aiming to double its turnover to ₹20,000 cr by 2030 on the back of a projected 25% revenue growth in FY26 alone.

The company is expecting its diversified portfolio (which comprises Food and Premium Personal Care) to contribute a minimum of 25% of its domestic revenue within the next three years. This is backed by an operational turnaround where the Sept quarter witnessed:

• Its net profit is hovering around ₹432 cr
  
• Revenue rising 30.7% to ₹3,482 cr
  

The turnaround indicates a shift in management goals from stabilisation to aggression. Marico Ltd is an FMCG heavyweight. Its digital brands are firing on all cylinders, and rural demand is showing signs of life. Now, there is a crucial question for investors. Is Marico successfully transitioning from a legacy oil major to a diversified, premium FMCG powerhouse?

How is the Digital Pivot Playing Out?

The narrative around traditional FMCG companies acquiring D2C (Direct-to-Consumer) brands was that they were "buying growth" at the expense of margins. This narrative has been ongoing for many years now. However, Marico seems to be bucking this trend.

The achievement in terms of the ARR milestone for its digital portfolio includes Beardo, Plix, Just Herbs, and True Elements.

Saugata Gupta (Marico’s MD and CEO) has highlighted a crucial divergence in the portfolio's health.

• Beardo, the men's grooming brand, has almost turned the corner and delivered a "double-digit EBITDA".
  
• Plix, which is the plant-based nutrition brand, has achieved break-even.
  

This can be a validation of Marico's "scale drives profitability" ideology. The company is not just incubating these brands but is pushing them toward financial independence.

However, the portfolio still has roadblocks.

• True Elements (healthy snacks) and Just Herbs (Ayurvedic beauty) have yet to reach the break-even point.
  
• The management has set a strict timeline and given these brands the next 18 months to turn profitable.
  

This objective is ambitious. This disciplined approach raises an interesting point. Will Marico continue to acquire new D2C players, or will it focus entirely on sweating its current assets?

How is Marico Planning to Go Beyond Hair Oil?

The structural shift in Marico’s core business is important. The company is actively reducing its reliance on its traditional stronghold (loose and commoditised hair oils) by strongly shifting toward Food and Premium Personal Care.

Currently, the Saffola franchise (oils and oats) is anchoring the business. However, newer entrants like Coco Soul have mirrored the digital portfolio's success by also crossing the ARR threshold.

The strategy here is "fewer, bigger, better". The company is focusing on scaling relevant categories rather than launching a bouquet of niche products. This focus has paid off. The food segment's gross margins have improved considerably over the last two years.

This diversification is happening against a backdrop of improving macroeconomics. The management has noted an improvement in urban markets and, crucially, a stabilisation in rural demand. This had been a pain point for the entire sector.

Inflation is cooling, and commodity prices (such as copra and edible oils) are moderating. Thus, Marico is expecting its core volume drivers, like Parachute, to return to growth as pricing normalises. With the rural economy recovering and the urban consumer upgrading to premium products, is Marico’s dual-pronged strategy the perfect hedge against volatility?

The Road to 2030: Execution is Everything

Marico has clearly stated that it wishes to become a ₹20,000 crore revenue giant by 2030. For this, it will require a compound annual growth rate that can outpace the industry average. This optimism is driven by a mix of internal and external factors.

• Externally, the government spending on rural development and favourable monsoons might revive consumption in semi-urban and rural pockets.
  
• Internally, the relentless push on premiumisation and the expansion of digital-first brands into omnichannel retail can drive value growth.
  

Marico is pushing to balance its ability to serve the "value" end of the market (Parachute) with the "aspirational" end (Beardo, Plix). If successful, Marico might re-establish itself from a steady compounder to a high-growth stock. So, as the company gears up for what it calls one of its strongest financial years, should investors view this as a signal to accumulate?

Source

NDTV Profit
Business Standard
PTI