FMCG sector signals recovery as Q3 revenue growth jumps to 7.5%: Report

Mumbai (Maharashtra) [India], February 23 (ANI): The Indian Fast-Moving Consumer Goods (FMCG) sector is showing a significant recovery, with the consumer staples coverage universe of Centrum Broking reporting a sharp sequential pick-up in top-line growth from 2% year-on-year in Q2 to 7.5% in Q3. This growth was largely driven by a volume increase of 5.4% excluding ITC, signalling a "silver lining" for the industry after several years of growth and margin challenges.
According to the report the industry has seen early signs of a pick-up in demand due to favourable macros such as moderating inflation, a favourable monsoon, and a healthy crop outlook, alongside government initiatives like GST rationalisation and income tax cuts.
While the third quarter experienced some one-off impacts from GST-led disruptions, the report notes that "exit growth across companies has been healthy which makes up more upbeat on Q4 outlook."
The report highlights that the sector is benefiting from a shift in momentum, stating, "Q3 has seen some benefit of restocking as well as pick-up in volumes due to grammage increases." Centrum believe that the coverage companies are set to "see sequential pick up in terms of top line and volumes," aided by the fact that the "RM basket has turned favourable which will aid in healthy margin trajectory." Management commentary suggests that the challenges of the past few years "are largely behind us."
Key takeaways from industry leaders indicate that rural markets are now growing ahead of urban markets, while quick commerce continues to lead the growth charge. The food category has shown a clear pick-up in volume momentum, specifically citing the performance of Nestle and Britannia. In the Home and Personal Care (HPC) segment, the hair oil category has also seen a notable recovery.
The positive trend is expected to carry into the final quarter of the fiscal year. The report anticipates that "Q4 will most likely see benefit of summer loading and pick-up in consumption," supported by a stable raw material basket. Despite minor disruptions in international pockets like Bangladesh, the overall sentiment remains optimistic as the industry transitions from a period of stagnation to volume-led growth. (ANI)