In Q4FY24, the demand for FMCG products continued to face challenges, impacting volume growth, as reported by Elara Securities.
Factors like reduced farm income and the emergence of small regional competitors are negatively impacting larger companies. The brokerage also noted that a delayed winter could affect seasonal categories like beverages.
“It was observed that Chyawanprash sales slowed down in Q3 due to the delayed onset of winter, and there has been no significant recovery in Q4,” stated the report.
Food categories remain stronger performers compared to home and personal care products. The revival of rural demand is essential for the FMCG sector, and companies are banking on a favorable monsoon to boost the rural economy.
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The report mentioned that regional companies, especially in sectors like biscuits and laundry, continue to pose challenges to larger competitors, benefiting from favorable commodity prices.
In Q4, essential commodities like crude oil and palm oil have seen a sequential rise. Nevertheless, the year-on-year growth has been modest, not significantly impacting margins. Companies have prioritized offering enhanced schemes to boost volume, without implementing any additional price reductions.
According to the brokerage, the FMCG coverage universe is anticipated to show a year-on-year revenue growth of 2.8 percent and volume growth of 3.6 percent in Q4FY24. This is compared to a five-year compound annual growth rate (CAGR) of 8.8 percent, slightly lower than the 9.0 percent recorded in Q3FY24.
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