India’s fast-moving consumer goods (FMCG) market, valued at Rs 5.6 trillion, will see a revenue growth of 7-9% in the ongoing fiscal (FY25), driven by a revival in rural demand and stable urban growth, rating agency Crisil said on Thursday.
Urban volume growth will likely come in at 7-8% during the period — the same as earlier, while rural volume growth will be around 6-7% in FY25, higher than the 4-5% seen earlier.
The report, prepared after a study of the country’s top 77 FMCG companies, noted that product realisations will be modest at 1-2% as commodity costs will remain largely benign in home and personal care. However, inflationary pressures in food and beverages may result in price hikes within the category, Crisil said, as companies could be forced to pass on some of the inflation to consumers.
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A combination of premiumisation and volume growth, the agency said, may result in operating margin expansion by 50-75 basis points to 20-21% in FY25. But rising marketing and brand-building expenditure to tackle competition may curb a further upside in operating margins, the rating agency said.
Crisil also said rural growth will be supported by higher minimum support prices and increased government spending on rural infrastructure and affordable housing primarily through the Pradhan Mantri Pradhan Mantri Awas Yojana-Grameen (PMAY-G). This will aid higher savings in rural areas, supporting their ability to spend more. Urban growth, in contrast, will be driven by rising disposable incomes and a focus on premium products.
The food & beverage and home care segments are likely to grow at 8-9% in FY25, while personal care will grow at 6-7%, Aditya Jhaver, director at Crisil Ratings, said.
From: financialexpress
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