MUMBAI: Indian fast-moving consumer goods companies are hopeful of healthy April-June quarter results even though headwinds driven by product price increases loomed large in the period.
Companies increased prices in a calibrated manner due to rising raw material costs. Dabur acknowledged price hikes in the haircare segment. Godrej Consumer Products Ltd said it had increased prices, without specifying the products.
"While the quarter saw significant volatility in costs on account of movement in crude prices and other raw materials and faced sourcing challenges resulting in lower fill rates across markets, we are pleased with the way we navigated our business through agile planning, sourcing and calibrated pricing actions," Godrej Consumer Products said in its quarterly update.
"Despite the challenging geopolitical backdrop and hyperinflationary pressures across our key markets, consumer sentiment remained resilient, with business trajectory improving sequentially, quarter-on-quarter," Dabur said in its quarterly update. Dabur, which offers a range of skincare, haircare, healthcare and oral care products, also said general trade showed sequential improvement.
Demand trends during April-June remained steady, supported by resilient economic activity, Marico said about its first-quarter performance. The India business further accelerated its growth trajectory, delivering double-digit underlying volume growth and reaching multi-quarter high, the maker of Parachute Coconut Oil said.
“In the past few months, we have seen price hikes in soaps, detergents, dishwash, toothpastes, edible oils and dairy,” analysts at Kotak Institutional Equities said in a 22 June report.
Companies were able to take measured price hikes because they had stocks of major raw materials. But the impact of trade disruptions over the past few months could reflect on margins soon.
“In 1QFY27, margin pressure is projected to remain limited amid older inventory and price hikes. However, pressure is likely to be more pronounced in 2QFY27,” analysts at Motilal Oswal Financial Services said in a report this month. It noted that with the recent price hikes, most GST 2.0-led pricing cuts are now reversed and consumer prices for some products are close to the pre-GST 2.0 levels.
On the India front, steady volume growth with a price hike (mid-single digit) should lead to healthy revenue growth. Both rural and urban demand are expected to have remained resilient, with no major divergence, the analysts wrote.
Cautious traders
Some companies noted that channel partners including distributors and wholesalers were cautious.
“Due to the ongoing geopolitical events impacting commodity prices, trade remained cautious in building inventories, which affected primary sales during the latter part of the quarter, particularly in general trade,” AWL Agri Business, formerly Adani Wilmar, said in a quarterly update. The company sells edible oils, wheat flour, rice, and pulses under the Fortune brand.
Fuel prices increased due to the blockade in the Strait of Hormuz after the war on Iran broke out on 28 February. Even if companies did not use crude oil derivatives as raw material, the price of packaging laminates and transportation shot up. This forced companies across the board to increase prices to maintain margins.
Inflationary pressures started building up following a slowdown after goods and services tax cuts in September 2025. Headline retail inflation in India, as measured by the Consumer Price Index (CPI), stood at a 16-month high of 3.93% in May. Consumer Food Price Index inflation was 4.78%. CareEdge Ratings projects India's headline CPI inflation will average 5% in FY27, largely driven by lower crop yields.
Farmers across India have struggled under the twin threats of drought and deluge over the past few months. India recorded its fifth-driest June since 1901, the India Meteorological Department said, while unseasonal rains hit the states of Rajasthan, Uttar Pradesh and Arunachal Pradesh. Weather forecasters confirmed the arrival of El Nino, the warming of the equatorial Pacific that increases the risk of a weak monsoon, just as food inflation started to accelerate.
“Brands which have managed to create a strong engine for growth in the rural areas will survive even if El Nino is severe,” said Diganth P, commercial transformation head at Gopal Snacks.
Rural market
Companies expect government support to cushion rural demand.
“Rural-focused government measures and GST-related interventions should help improve overall demand sentiment," Harsha Vardhan Agarwal, vice chairman and managing director of Emami Ltd said.
The Cabinet Committee on Economic Affairs has approved an increase in the minimum support prices for 14 kharif crops including paddy and sunflower seeds for FY27. MSP is the rate at which the government buys crops from farmers.
FMCG companies that increased prices were careful to ensure that sales volumes were not hurt. Volume growth comes mainly from the rural areas, which account for 60% of the customers. Many FMCG companies reported record volume growth in Q4 of FY26.
Hindustan Unilever, the largest Indian FMCG company, posted its best volume growth in 15 quarters, while Dabur had its best in 18 quarters and Marico achieved a seven-year high volume growth. The threat of inflation could derail the plan to continue this volume growth.
Companies tried to ease the impact on volumes by not altering prices of ₹5 and ₹10 products. Instead, they reduced the weight or volume of product packages while keeping their retail prices unchanged.
Expectations are now tied to prices cooling down following the ceasefire in West Asia and the deal signed by the US and Iran. Oil prices dropped to the lowest level in more than four months after the blockade of the Strait of Hormuz was lifted.
The Nifty FMCG index has advanced 10% since 30 March on optimism that easing crude oil prices will bring relief to consumer companies.
“A gradual improvement appears more likely than a sharp rebound,” Mani Singhal, managing director and co-lead, consumer and retail practice, at Alvarez & Marsal India, told Mint about the consumption momentum. “While H1 demand recovery may be somewhat staggered, the outlook for rural consumption remains constructive. Easing inflation and improving rural sentiment should support a broader recovery in volumes.”
Prices of copra (used in coconut oil), soda ash (used in detergents) and tea have decreased year-on-year, easing pressure on some products.
“We expect FY27 to be stronger than FY26, led by better seasonality, continued premiumization and sharper execution across sales and distribution,” Harsha Vardhan Agarwal of Emami Ltd, told Mint.