Consumer Staples Demand to Surge from 4QFY26: Motilal Oswal Predicts GST Boost
Overview
Consumer staple companies anticipate a demand uplift starting fourth quarter of fiscal year 2026. Motilal Oswal report attributes this to stabilizing trade post-GST reduction and supportive government measures, projecting a steady recovery driven by resilient rural and improving urban markets.
Consumer staple firms are poised for a gradual demand recovery beginning in the fourth quarter of fiscal year 2026, according to a report by Motilal Oswal. Stabilizing trade conditions following Goods and Services Tax adjustments and various government initiatives are expected to underpin this improvement.
Demand Outlook
The report anticipates that demand for staple products will pick up steadily in the coming months. This recovery is forecast to be supported by robust rural demand and an uptick in urban market sentiment. "Multiple measures have been initiated by the govt., and we expect steady improvement in demand from 4QFY26 onward," the analysts stated.
Factors Driving Recovery
Several government programs are expected to bolster consumption, paving the way for consistent demand growth from 4QFY26. Revenue growth for staple companies should see sequential improvement as trade disruptions subside. The initial implementation of GST 2.0 caused disruptions through October and November, impacting business for nearly 40-45 days. However, conditions began to normalize thereafter, with restocking efforts supporting primary growth.
Companies have strategically adjusted low-unit price packs with grammage additions, effectively passing GST rate reduction benefits to consumers. This move is anticipated to drive volume growth, particularly in packaged foods, by offering enhanced value without direct price hikes.
Seasonal Boost
A favorable winter season is projected to further stimulate consumption across various categories. Health supplements, personal care items, hot beverages, and other winter-specific goods are expected to see increased off-take. By the fourth quarter, as trade disruptions fully recede, growth figures should more accurately reflect underlying demand patterns.
Normalization Ahead
Rural demand is expected to remain resilient, reflecting ongoing recovery trends, while urban demand shows signs of improvement. The confluence of stabilized trade, government support, seasonal patterns, and strategic pricing actions by companies will likely provide a sustained impetus to consumption. Motilal Oswal foresees consumer staple companies entering a phase of steady demand recovery from 4QFY26 onwards.
