Most companies reported a strong domestic volume growth during the quarter although inflationary pressures on key raw materials pushed them to take price hikes on hair oils, cooking oil and soaps
NEW DELHI :
India’s top fast-moving consumer goods (FMCG) companies such as Dabur India, Marico Ltd, Emami Ltd, and Jyothy Labs reported strong December quarter earnings, helped by an improvement in urban markets and a strong demand for winter products and personal care brands. Rural markets continued to see healthy growth on the back of government benefits doled out both in cash and kind.
Urban demand has come back after three quarters, said Abneesh Roy, executive vice president (research) at Edelweiss Securities. However, it remained below the pre-covid level. Most companies reported strong domestic volume growth during the quarter, though inflationary pressures on key raw materials pushed them to raise prices of hair oil, cooking oil and soap.
On Friday, Dabur India Ltd reported its highest ever quarterly revenue and profits in the December quarter with a 18.1% volume growth in domestic business. Marico’s domestic volumes grew 15% from the previous year, a multi-year high, analysts at Jefferies said in a note. Emami, which sells Boroplus cream and Navratna oil, reported a second consecutive quarter of double-digit revenue growth of more than 16%. Growth was strong across the portfolio, Jefferies analysts said in a separate note.
“At Marico, we are witnessing a faster-than-expected recovery in consumer sentiment," said Pawan Agrawal, chief financial officer, Marico. The maker of Parachute hair oil said its quarterly growth was led by the rural markets, which has been outpacing urban demand. Rural sales grew by 24% in volume terms, while urban markets grew by 10% in volume terms, it said.
Rural markets were lagging urban ones for FMCG companies before the covid-19 outbreak, but the lockdown reversed the trend as migrant workers went to their villages. “Rural has seen a pretty good comeback and over the last couple of quarters we are seeing rural to be pretty resilient. The urban markets, which took a big toll because of mobility reasons, are coming back to growth, albeit still at a very low level," Sanjiv Mehta, chairman and managing director, Hindustan Unilever Ltd told Mint in an interview.
The December quarter was clearly marked by better mobility that helped in offtake of several categories such as beauty and personal care, which were previously impacted by the lockdown.