FMCGs witness strong Q3 recovery on demand surge
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New Delhi: Driven by GST reforms, robust festive demand, and softening raw material prices, the FMCG industry expects volume-based growth, supported by a mid-single digit revenue rise and improved operating margins in the December quarter.
After settling down of GST-led disruptions, where distributors and retailers focused on liquidating the existing higher-priced inventory in the channel, the FMCG companies have witnessed signs of recovery, major listed firms informed exchanges in their recent updates on the December quarter. Moreover, post-trade stabilisation, consumer sentiment improved in urban and rural areas. However, in continuation with the previous trend, rural demand continued to outperform urban demand this quarter as well, FMCG companies like Dabur, Marico, and Godrej Consumer Products Ltd (GCPL) said.
The FMCG industry, which was facing slow consumption, now expects a sustained recovery in demand and improvement in revenue trajectory in the coming quarters.
Besides, in terms of channels, organised trade maintained its strong growth momentum, with e-commerce, including hyper-local delivery platforms, growing in strong double-digit. "Within the India business, we expect the home & personal care business to grow in double digits on the back of strong growth in hair oils and oral care category. Key brands, which are likely to record healthy volume-led growth, are Dabur Amla franchise, Dabur Almond, Dabur Anmol, Dabur Red Toothpaste and Meswak," said Dabur in its updates.
The majority of its portfolio continued to outpace category growth and is expected to register market share gains during the quarter.
"Overall, we expect consolidated revenue to grow in the mid-single digits with operating profit and profit after tax to grow ahead of revenue," Dabur said. Similarly, GCPL also said that demand conditions in the domestic market strengthened progressively during the quarter. "We remain confident of a gradual improvement in consumption over the coming quarters, supported by falling inflation and improving affordability, following lower GST rates," said the FMCG arm of Godrej Industries Group (GIG).
