FMCG firms seen posting mid-to-double digit Q3 growth as volumes recover

ET Intelligence Group: FMCG companies are expected to deliver mid-single-digit to low-double-digit revenue growth for the December quarter, driven by volumes, abating GST-related disruptions and stable pricing actions. Commodity trends remain benign across key inputs such as crude derivatives, palm oil and packaging materials, providing room for gross margin expansion. Resilient rural demand and portfolio premiumisation continue to be the driving force.

ITC is expected to post healthy improvement in revenue and profit, led by a resilient cigarette business and steady momentum in other-FMCG and agri business. Cigarette volumes are projected to grow around 6-7%, with pricing remaining stable. The FMCG segment should deliver close to 9% revenue growth, supported by stable raw materials, premiumisation and cost efficiencies.

For Hindustan Unilever (HUL), GST-related trade disruptions affected nearly 40% of the product portfolio in the first half of the December quarter, which reduced in the second half. Underlying volume growth is expected at around 2-3%, with low single-digit price growth. Home and personal care categories may see gradual recovery amid a likely better show by beauty and wellbeing. Reported margin may improve after the demerger of the low-margin ice-cream business and favourable pricing trends.

Nestle India is expected to report double-digit revenue growth, supported by steady domestic volumes and normalisation post-GST implementation.

Most categories continue to see double-digit momentum except milk products and nutrition. Elevated milk and coffee prices may weigh gross margin, which is estimated to contract year-on-year despite sequential improvement. Ebitda is likely to grow in high single digits.

Tata Consumer Products is set for a strong quarter with broad-based growth across beverages, foods and new-age categories. Domestic tea volumes are expected to grow modestly, aided by price reductions passed from raw tea deflation, while the salt portfolio continues to post solid volume-led growth.

Sampann and NourishCo are likely to remain standout performers. Margin expansion is anticipated both year-on-year and sequentially, supported by normalisation in global operations and a low base in the Indian tea division. Britannia Industries is poised for a recovery after GSTrelated destocking impacted performance in the previous quarter. With grammage-led growth in lower-unit packs and normalisation in distributor pipelines, biscuit volumes are estimated to rebound in mid-single digits, lifting overall revenue growth. Lower raw material prices should support gross margin expansion. Ebitda margin is expected to improve despite higher brand investments. Varun Beverages is expected to close the calendar year on a positive note, driven by seasonal demand and improving volumes in both domestic and international markets. Consolidated volume is projected to rise in the high-single digit, supported by strong traction in South Africa and steady growth in India. Margin may remain stable and profitability could rise due to lower interest costs