Marico's Diversification Gambit: Did Their FY24 Plan Survive the FMCG Squeeze?

Executive Summary

In its fiscal year 2024 earnings review, Marico Limited painted a picture of robust health, achieving its highest-ever operating margins and laying out an ambitious roadmap for diversification. The company celebrated a 12% rise in operating profit to ₹2,026 crores on a top line of ₹9,653 crores, all while navigating a slow post-pandemic consumption recovery. The strategy was clear: leverage a strong core business to aggressively expand into Foods and Premium Personal Care, de-risk the international portfolio, and deliver consistent shareholder value.

But how does a strategy from 2024 look from the vantage point of late 2026? With the FMCG sector now facing margin pressures and broader market indices lagging, we’ll dissect Marico’s FY24 performance and guidance to assess whether its strategic bets were well-placed to navigate the current economic landscape. Was the margin peak of FY24 a summit or simply a new base camp for future growth? Let’s dive in.

A Snapshot of FY24 Performance

To set the stage, let’s look at the headline numbers Marico reported for the financial year ending March 31, 2024. The performance was solid, marked by significant profitability gains even as a full-blown consumption revival remained elusive.

The key takeaway from FY24 was margin excellence. Management attributed this to robust gross margin expansion and confidently guided that operating margins would “structurally inch up over the next few years.” This optimism, however, now faces the headwind of sectoral margin pressure prevalent in 2026.

Business Model: The Core, The New, and The Global

Marico operates a classic FMCG model but with a clear strategic pivot underway.

• Industry: Fast-Moving Consumer Goods (FMCG).
• Business Segments:
  • India Business (Core): Dominated by heritage brands like Parachute and Saffola, which hold #1 or #2 positions in their respective categories. This is the cash cow funding future growth.
  • India Business (Growth Engines): The focus of diversification.
    • Foods: A rapidly scaling portfolio including Saffola Oats, immunity boosters, and healthy snacks.
    • Premium Personal Care: A digital-first portfolio of brands aiming to capture the urban consumer.
  • International Business: Presence in Bangladesh, MENA, South Africa, and other regions, providing geographical diversification.
• Key Drivers:
  • Sales: Consumer demand (especially rural), brand equity, distribution reach (modern trade, e-commerce, and general trade), and product innovation.
  • Expenses: Cost of raw materials (like copra), advertising & promotion (A&P) spends, and employee costs.

Sales Analysis: Can the New Engines Outrun a Slowing Sector?

In FY24, Marico’s India business saw stable performance, with Modern Trade and E-commerce growing in double digits to account for ~30% of domestic sales. While the core held steady, the real story was the ambition laid out for the new growth engines.

Guidance from FY24:

• Foods Portfolio: To grow at 20-25% CAGR and double its scale between FY24 and FY27.
• Premium Personal Care: To double the scale of its digital-first brands by FY27.
• Combined Impact: These two segments were projected to increase their share of domestic revenue from ~20% in FY24 to ~25% by FY27.

Analysis from a 2026 Perspective:

This diversification strategy was Marico’s explicit answer to the low single-digit growth plaguing the broader FMCG space. From our current standpoint in August 2026, where the FMCG sector is an underperformer, the success of these two portfolios is paramount.

• The Bull Case: If Marico has delivered on this guidance, it has likely outperformed the sector significantly. The domestic-focused growth theme resonates well with the current investment climate, which favors local stories over export-linked ones.
• The Bear Case: The “margin pressure” cited in the current economic context could have stemmed from intense competition in these new categories, potentially slowing growth or making it less profitable than anticipated. The increased A&P spend in FY24 (up to 9.9% of sales from 8.7%) was an early sign of the high investment needed to build these brands.

The key question for investors today is whether this strategic pivot created a truly resilient, high-growth consumer company or just a more complex version of a slow-growth stalwart.

Earnings Analysis: The Margin Question

Marico’s FY24 was defined by its record 21% operating margin. This was a stellar achievement, driven by a remarkable 800 bps gross margin expansion in the Foods business. The company guided for margins to continue their upward trajectory.

How does this look now?

The 2026 economic context points to FMCG margin pressure. This puts Marico’s optimistic FY24 guidance under the microscope.

• Sustaining Peak Margins: Defending, let alone expanding, a peak margin of 21% in a tough environment is a monumental task. The lower inflation (~3%) in 2026 should help with input costs, but competitive intensity and the need for high A&P spends could easily offset this benefit.
• Growth vs. Profitability: The push into Foods and Digital brands is inherently a margin-dilutive effort in the short term. The FY24 guidance for the digital portfolio to hit double-digit EBITDA margins by FY27 was ambitious. Assessing whether they achieved this is critical to understanding their current earnings profile.

Based on its FY24 performance, Marico was a Stalwart with “Fast Grower” ambitions. The subsequent two years have tested whether those ambitions could be realized profitably. A positive change would be seeing revenue growth accelerate while margins hold firm, even if slightly below the 21% peak.

International Business: A Prescient De-risking Move 🌏

In FY24, Marico’s international business grew 9% in constant currency and management made a key strategic point: they were actively reducing dependence on their largest international market, Bangladesh. They aimed to moderate Bangladesh’s revenue share to 40% by FY27, fueled by a ramp-up in MENA and South Africa.

Looking back from 2026, this was a particularly shrewd move. With global uncertainty, FPI outflows, and rising trade tensions (like the new 50% US tariffs), companies with diversified and de-risked global footprints are better positioned. By focusing on different growth corridors, Marico mitigated geopolitical and macroeconomic risks associated with any single emerging market. This strategy has likely provided a valuable cushion to its consolidated performance.

Capital Expenditure (CapEx) and Shareholder Payouts

• CapEx: Marico’s plan was consistent and disciplined, with an annual CapEx forecast of ₹125-175 crores for capacity augmentation and maintenance. In FY24, it spent ₹153 crores, right within this band. This suggests a focus on sweating existing assets and undertaking incremental, low-risk expansion rather than “big bang” projects.
• Financing & Payouts: The company maintained a very shareholder-friendly policy, with a dividend payout ratio of ~75% of recurring consolidated net profits over the last three years. While great for income investors, this also signals that the company believes it can fund its ambitious growth plans primarily through internal accruals without needing to retain a larger chunk of its earnings.

Key Takeaways from the FY24 Q&A

The shareholder Q&A in 2024 provided clues to the management’s thinking and market concerns:

1. Focus is Key: Management pushed back on suggestions for extensive diversification (like biscuits), stating their focus remains on categories where they can be #1 or #2.
2. Digital is Real: E-commerce already constituted 11-12% of domestic business and was growing in “high double digits.” A clear indicator of their omnichannel prowess.
3. Watchful on Bangladesh: While publicly optimistic, the tone on Bangladesh was one of caution, reinforcing the wisdom of their geographical de-risking strategy.

Final View from 2026

Revisiting Marico’s FY24 results and strategy provides a powerful lesson in corporate foresight. The company identified the structural slowdown in its core and laid out a clear, albeit challenging, path to reignite growth through diversification into Foods and Premium Personal Care.

From today’s perspective, the investment thesis for Marico hinges on the execution of that 2024 plan.

• 👍 The Positives: Its strong domestic focus aligns perfectly with the current market preference. The de-risking of its international business was timely. Its brands remain powerful and its distribution network formidable.
• 🤔 The Questions: Has the FMCG sector’s margin pressure eroded its profitability? Did the high-growth Foods and Digital-first brands deliver on their ambitious targets, or did they fall victim to intense competition?

Marico remains a Stalwart of the Indian consumer space, but its journey over the past two years has been about proving it can also be a Grower. In a stock-picker’s market, investors will need to see tangible proof that its new engines are not just running, but firing powerfully enough to drive the company forward against sectoral headwinds.

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