Higher volumes, margins potential rerating triggers for FMCG companies

The fast-moving consumer goods (FMCG) sector is looking at volume growth and better margins from the second quarter of the ongoing financial year 2026 (Q2FY26).

- DEVANGSHU DATTA

FMCG companies are seeing structural growth since categories like shampoos and detergents are under-penetrated. Consumers are also opting for premiumisation, which is a key driver. Rural growth has sustained and a good monsoon may lead to acceleration in demand.

Some raw materials are also seeing moderating inflation. Grain prices are almost unchanged though wheat is slightly up. Coffee, cocoa, and tea prices have softened by high single digits, or double digits on a year-on-year (Y-o-Y) basis. However, edible oils are inflationary, with palm oil up 12 per cent Y-o-Y (up 4 per cent quarter-on-quarter or Q-o-Q) and copra prices have surged 29 per cent Q-o-Q. This is a concern for Marico. Crude is stable though geopolitical risks could push up plastic packaging and logistics costs. Soybean, sunflower, and mustard oil saw Q-o-Q upticks. Nielsen data says the FMCG sector in aggregate grew 13.9 per cent Y-o-Y in value in Q1FY26, after being up 10.7 per cent Y-o-Y in Q4FY25.