FMCG player Marico Ltd's shares rallied over four percent despite a muted market sentiment on Friday, July 4, as its business update for the quarter ended June 30, 2025 impressed investors.

"During the quarter, the sector exhibited consistent demand patterns, marked by improving trends in rural markets and steady urban sentiment. We expect gradual improvement in the quarters ahead, supported by easing inflation, a favourable monsoon season and policy stimulus," said the FMCG player.

At 10.40 a.m., shares were quoting Rs 729.85, up 2.3 percent after paring some intraday gains.

Parachute volumes dipped slightly amid steep input cost inflation, but remained resilient after adjusting for ml-age changes. Saffola Oils saw revenue grow in the high twenties with mid-single-digit volume growth, aided by price cuts post import duty reduction.

Value Added Hair Oils posted low double-digit growth, supported by strong demand in mid and premium segments. The Foods and Premium Personal Care segments continued to scale up steadily. International business recorded high-teen constant currency growth, with Bangladesh showing notable resilience.

Overall, consolidated revenue rose in the low twenties year-on-year. While gross margins came under pressure due to cost inflation and a high base, the company maintained its brand-building investments. Marico expects margin recovery in the second half and remains focused on sustainable, volume-led growth.

The company expects India volumes to improve sequentially and reach multi-quarter high, surpassing the strong volume growth of 7 percent in 4QFY25. Despite a muted demand environment, Marico maintained its guidance to deliver double-digit growth driven by improving volume trajectory.

"We expect sales to grow in high-teens in H1FY26 and in double digits in H2FY26, as we
bake in price cuts in Parachute for H2FY26 with moderation in copra prices. While operating margin should contract in Q1 due to continued uptrend in copra prices, we expect it to start
improving QoQ from Q2," said Japan-based brokerage Nomura.

Further, the brokerage maintained its buy rating on the firm, with a target price of Rs 800 per share, indicating an upside potential of 12 percent.