The December quarter (Q3) of FY26 may be the first period in months when fast-moving consumer goods (FMCG) companies may see early signs of demand recovery. Latest quarterly updates by companies such as Marico, Dabur, Godrej Consumer (GCPL) and AWL Agri Business have indicated the same, though analysts caution that the food category may do better than personal care, aided by GST cuts and a shift from unbranded to branded consumption.
Data from retail intelligence platform Bizom points to a strong rebound in Q3FY26. Overall FMCG growth rate in Q3, it said, stands at 6.9%, double that of the 3.1% growth rate reported a year ago. Sequentially, overall FMCG growth rate in Q3 is marginally higher than the 6.2% reported in the September quarter.
The latter was hit due to GST transition issues in September. While the December quarter also saw de-stocking issues spill out into October and November, the month of December was better from a sales perspective, Bizom said.
Rural Demand Outshines Urban Markets
Bizom tracks value growth and not volume growth across FMCG categories. For the December quarter, the platform says that rural areas continued to outperform urban areas in terms of value growth. Rural value growth stood at 8% in the quarter under review versus 5.1% reported for urban areas during the period.
“Despite GST rate cuts, value growth in the December quarter remains resilient, implying underlying strength in consumer demand,” Harshit Bora, analytics head, Bizom, said.
Analysts at brokerages Motilal Oswal and Emkay Global said that food companies were better placed in December quarter, with many likely to report a double-digit growth, while home and personal care firms would see slower growth rates due to GST-related trade issues during the period.
Dabur said that the month of October saw distributors and retailers focus on liquidating higher-priced inventory. “Post trade stabilisation, consumer sentiment improved in both urban and rural areas,” it said in its quarterly update, adding that it would see mid-single digit consolidated revenue growth during the period. Operating profit and profit after tax (PAT) would grow ahead of revenue during the quarter, it added.
GCPL said that demand conditions had strengthened progressively during the December quarter, with its standalone business well-positioned to deliver a double-digit revenue growth for the quarter, underpinned by close to double-digit underlying volume growth (UVG) during the period.
Volume and Franchise Traction
For Marico, underlying volume growth in the India business in Q3 remained in high single digits, while marking a slight improvement on a sequential basis. Parachute recorded a marginal volume decline amid elevated input cost and pricing conditions. Saffola Oils had a muted quarter while value added hair oils grew in the twenties, it said, reinforcing sustained traction in the franchise.
The company added that consolidated revenue growth on a year-on-year (y-o-y) basis in Q3 stood in the high twenties, while operating profit growth would touch double-digits on a y-o-y basis.
AWL Agri Business, best-known for its Fortune brand of edible oils, said that its food and FMCG business had shown a gradual recovery in the December quarter with improved offtake. Excluding rice and wheat, this business, the firm, reported a strong growth exceeding 30% y-o-y during the quarter.