Marico domestic volumes rise in Q2 despite GST disruption

New Delhi: Marico’s domestic business recorded high single-digit volume growth in the second quarter of the fiscal year, despite temporary disruption from the implementation of new GST slabs.

The company said it “expects modest operating profit growth on a year-on-year basis” after extending discounts on pipeline inventory to channel partners during the two weeks leading up to the GST rate changes and facing elevated commodity prices.

The government announced the Next-Generation GST reforms on September 4, lowering taxes on most daily essentials, including food and personal care products, which came into effect on September 22. The GST rationalisation benefited around 30 per cent of Marico’s India business and is expected to stimulate demand and support long-term FMCG sector growth.

"In line with the intent of the government's measures, we have passed on the benefits of revised GST rates to consumers across relevant product categories, reinforcing affordability and accessibility," said Marico, which owns brands including Saffola, Parachute, Hair & Care, Nihar and Livon.

During the quarter, the India business maintained steady momentum through July and August, while absorbing the temporary impact of trade channel disruption and advance purchases by the Canteen Stores Department ahead of the new GST rates.

"Despite the same, underlying volume growth in the India business remained in high single digits, albeit moderating sequentially," the company said. According to Marico, the sector witnessed “stable demand trends” for most of the quarter.

Marico added, "We expect sentiment to gradually improve during the upcoming festive season and months ahead, aided by easing inflation, above-average monsoons, healthy crop outlook and policy stimulus."

In Q2, the Parachute brand recorded a “low single digit” decline in volumes due to “unprecedented hyperinflationary input cost” and pricing conditions. “After normalising for ml-age (grammage) reductions in lieu of price increases, the brand was flattish in volume terms during the quarter,” the company said.

Saffola Oils delivered flattish volumes with high base effects, alongside revenue growth in the high teens, while the Value Added Hair Oils business recorded high teens growth, reflecting a continued recovery path.

"We expect the franchise to maintain a healthy growth momentum over the near and medium term, supported by the strategic focus in the mid and premium segments of the portfolio, enhanced direct reach driven by Project SETU and the recent GST rate rationalisation," Marico said.

The Foods and Premium Personal Care segments, including digital-first brands such as Beardo, Just Herbs, True Elements and Plix, continued to scale up, according to the report.

Marico’s international business sustained “robust momentum,” with constant currency growth reaching the twenties. “Bangladesh and MENA businesses visibly outperformed, while other markets were steady in their course,” it said.

Regarding input costs, the company noted that copra prices remained rangebound after a 10–12 per cent correction, while vegetable oil prices stayed elevated. Crude oil derivatives remained stable.

Owing to these factors, Marico said gross margins are expected to face incremental pressure on a high base, partly due to pricing-led effects. “We expect gross margin pressures to ease in the second half of the year.”

Despite elevated input costs, the company continued investments in brand-building to strengthen long-term equity and portfolio diversification. "In addition, we also extended discounts on the pipeline inventory to our channel partners during the two weeks leading up to the effective date of the GST rate changes," Marico added, "In the given context, we expect modest operating profit growth on a year-on-year basis."

Marico has reiterated its outlook of delivering sustainable and profitable volume-led growth over the medium term. The company said a detailed information update will follow once the Board approves the financial results for Q2 FY26.