The outlook is bullish for overall festive demand and a significant recovery in rural consumption, encouraged by easing inflation and hopes of doles ahead of the elections
The FMCG industry in India is expecting low to mid-single-digit volume growth in the July-September quarter due to weak macroeconomic conditions and below-normal rainfall. Companies such as Marico, Dabur, and Godrej Consumer Products Ltd have reported a gradual recovery in consumption, with the festive season shifting to the third quarter. The companies expect improved gross margins due to moderating inflation and easing price growths. However, rural demand remains weak, and urban-focused companies are expected to have an advantage.
FMCG giants Marico, Dabur, and Godrej Consumer Products highlighted that the festive season has entirely shifted to Q3, thus delaying demand into the next quarter.
Over their gross margins, the companies said they expect it to be better sequentially, helped by moderating inflation and easing price growths. This also helped them to go for higher A&P (Advertisements and Promotions) spending.
Kaustubh Pawaskar, DVP, Fundamental Research at BNP Paribas, predicts that Q2 will be a weak quarter for consumer goods companies, with no significant improvement in demand. However, higher margins may contribute to decent bottom line growth. Pawaskar expects a recovery in volumes from Q3, driven by stable urban consumption and increased government spending in rural markets. The QSR space has been impacted by inflationary pressures, but burgers and sandwiches will perform well from Q3.