India's fast-moving consumer goods (FMCG) industry has registered a powerful rebound in the October-December quarter, driven by a combination of favorable tax changes, strong festive season sales, and a decline in the cost of key raw materials. This recovery marks a significant turnaround for the sector, which had faced headwinds in previous periods.
Major Players Report Volume and Margin Growth
Leading companies like Dabur, Marico, and Godrej Consumer Products have all reported positive volume growth alongside single-digit revenue increases. Crucially, these firms have also managed to improve their operating profit margins, indicating healthier bottom lines.
Dabur India expressed strong optimism for its Home & Personal care segment, anticipating double-digit growth. The company highlighted specific categories like hair oils and oral care as major growth drivers. Key brands expected to lead this charge include the Dabur Amla franchise, Dabur Almond, Dabur Anmol, Dabur Red Toothpaste, and Meswak.
Godrej Consumer Products echoed this positive sentiment, noting improving market conditions and expecting revenue growth to be close to double digits. The company's confidence stems from falling inflation and the increased affordability of products due to lower GST rates. "We remain confident of a gradual improvement in consumption over the coming quarters, supported by falling inflation and improving affordability, following lower GST rates," stated the FMCG arm of the Godrej Industries Group.
Marico provided perhaps the most striking forecast, anticipating revenue growth in the high twenties for the third quarter (Q3), accompanied by better margins. The company cited steady demand and supportive factors like lower inflation, reduced GST rates, higher minimum support prices for farmers, and a good crop season.
Rural Markets and E-commerce Outperform
A standout trend from the quarter was the continued outperformance of the rural market compared to urban areas. Rural sales reported better numbers, signaling a revival in demand from India's heartland. Alongside this, there was a sharp increase in e-commerce sales, highlighting a permanent shift in consumer buying behavior.
Industry analysts suggest the market is now stabilizing after the initial disruptions caused by the implementation of the Goods and Services Tax (GST), which required extensive stock clearance. Customer sentiment has shown reported improvement in both urban and rural markets, with the latter demonstrating greater strength.
Organized Retail and Major Chains Shine
The positive momentum was not confined to FMCG companies alone. Major organized retailers also posted strong financial performances for the period.
- Trent reported a 17% increase in revenue, which rose to Rs 5,220 crore.
- Avenue Supermarts (D-Mart) saw its profits jump by 18.27% to Rs 855.78 crore, while its revenue grew by 13.32% to Rs 18,100.88 crore.
- Titan Company witnessed revenue growth of up to 40%, a surge largely attributed to rising gold prices.
The organized retail segment continues to perform well, with e-commerce and quick-commerce (quick delivery) services growing at a particularly high rate. Companies across the board expect this positive trend to continue, fueled by improving macroeconomic conditions and an anticipated increase in overall consumption.
