Why Is Goldman Sachs Bullish On Marico With A Buy Rating?
Marico Limited is one of India’s leading consumer goods companies, best known for household brands such as Parachute, Saffola, and Livon. With a strong presence in hair care, edible oils, health foods, and personal care, Marico has built a reputation for consistent growth, innovation, and customer trust. The company operates across more than 25 countries, making it a diversified FMCG player with a growing international footprint. Its strategy of balancing core brand strength with innovation-led portfolio expansion positions it uniquely within India’s fast-changing consumption landscape. Against this backdrop, Goldman Sachs (GS) has reiterated its Buy recommendation on Marico, setting a target price of ₹830, highlighting portfolio transformation as the key driver of accelerated earnings growth.
Goldman Sachs’ Bullish Thesis
Goldman Sachs believes that Marico’s ongoing transformation, which includes expanding its healthy foods portfolio, modernizing hair oil offerings, and deepening its presence in value-added categories, will directly translate into faster revenue and earnings growth. Additionally, the government’s GST cut for value-added hair oils (VAHO) is expected to accelerate category recovery, benefiting Marico significantly as a market leader in this segment.
Portfolio Transformation Strategy
The company’s strategy focuses on diversifying beyond its traditional strengths. While Parachute coconut oil remains a cash cow, Marico has invested aggressively in foods through brands like Saffola oats, honey, and soya products. These segments not only expand revenue streams but also align with rising consumer preferences for healthier lifestyles. This portfolio shift is expected to reduce dependency on cyclical categories and provide a more resilient growth engine.
Impact Of GST Cuts On VAHO
The government’s decision to reduce GST on VAHO provides a direct boost to Marico, which commands strong market share in premium hair care. Lower prices are expected to spur consumer demand, especially in rural and semi-urban markets, where affordability is key. With margins already healthy in this category, the volume uptick could significantly enhance earnings momentum.
Earnings Growth Outlook
Goldman Sachs highlights that Marico’s earnings trajectory is entering an inflection point. Stable raw material costs in key inputs like copra, coupled with efficiency gains from supply chain improvements, are expected to expand margins. When combined with rising topline from new categories and GST-led VAHO recovery, EPS growth could accelerate over the next two years.
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Competitive Positioning
Unlike some FMCG peers overly dependent on staples or discretionary products, Marico strikes a balance. Its stronghold in stable segments like edible oils and core hair care ensures resilience, while its push into foods and premium personal care offers growth optionality. This blend positions Marico favorably in a highly competitive sector.
Medium-Term Catalysts
Rural recovery remains critical, as rural demand contributes significantly to Marico’s volumes. Additionally, consumer uptrading toward premium products supports margin expansion. The company’s growing presence in emerging markets like Bangladesh and the Middle East further strengthens its growth profile. Combined with domestic policy support, these factors create a multi-dimensional growth story.
Investor Takeaway
Goldman Sachs’ Buy call with a target price of ₹830 reflects confidence in Marico’s transformation story. The FMCG major is not just defending its market leadership but actively reshaping its portfolio to accelerate earnings. With GST cuts aiding VAHO, stable costs supporting margins, and new categories driving incremental growth, Marico looks well-poised for a strong re-rating. For investors seeking a defensive stock with structural growth triggers, Marico continues to be an attractive bet.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
