FMCG Sector Roars Back: Q3 Demand Surge Fuels Revenue and Margins
Overview
India's FMCG industry is poised for strong volume-based growth in Q3, driven by GST stabilization, robust festive demand, and falling raw material costs. Companies report mid-single digit revenue increases and improved operating margins. Rural demand continues to outpace urban areas, while organized retail and e-commerce show double-digit expansion. Key players like Dabur, Marico, and Godrej Consumer Products anticipate sustained recovery.
Stocks Mentioned
FMCG Sector Stages Robust Q3 Comeback
The Fast-Moving Consumer Goods (FMCG) sector in India is experiencing a significant recovery, with companies anticipating volume-driven growth, mid-single digit revenue increases, and improved operating margins for the December quarter. This resurgence follows the stabilization of Goods and Services Tax (GST) reforms and a surge in festive demand, amplified by softening raw material prices.
Demand Dynamics Shift
After an initial period of GST-induced inventory adjustments by distributors and retailers, consumer sentiment has seen a notable uplift in both urban and rural markets. Continuing a prevailing trend, rural demand has once again outperformed its urban counterpart this quarter. Major listed firms, including Dabur India, Marico, and Godrej Consumer Products Ltd (GCPL), confirmed these positive signs in their recent operational updates.
Channel Strength
Organized trade channels have maintained strong growth momentum. E-commerce, encompassing hyper-local delivery platforms, delivered robust double-digit expansion, signaling a shift in consumer purchasing habits. The industry, which had previously grappled with sluggish consumption, now forecasts a sustained recovery and an improving revenue trajectory in the upcoming quarters.
Company Performance Highlights
Dabur India expects its India business, particularly Home & Personal Care, to grow in double digits, driven by key brands like Dabur Amla and Dabur Red Toothpaste. The company anticipates consolidated revenue growth in the mid-single digits, with operating profit and net profit expected to outpace revenue.
Godrej Consumer Products Ltd noted progressively strengthening domestic demand conditions. It projects close to double-digit revenue growth in rupee terms and double-digit EBITDA growth at a consolidated level, bolstered by domestic gains and improving international business trends.
Marico anticipates a high-20s increase in consolidated revenue for Q3, alongside margin expansion. The company reported steady demand trends and expressed optimism for continued consumption improvements, supported by easing inflation and enhanced affordability due to lower GST rates and agricultural support.
