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Informist, Monday, Jun. 16, 2025

 

By Avishek Rakshit

 

KOLKATA – Eight of the 12 fast-moving consumer goods companies that are part of the Nifty 200, met or fared better than analysts' expectations of a 0.6% net profit growth for the sector in the March quarter. On the revenue front, seven companies met or exceeded the consensus view for 8.6% revenue growth for the sector, while five failed to meet expectations. On an average, these 12 companies reported the highest revenue growth for the sector in the past eight quarters.

 

The outperformers on the average net profit sectoral growth were Britannia Industries Ltd., Hindustan Unilever Ltd., ITC Ltd., Marico Ltd., Patanjali Foods Ltd., Tata Consumer Products Ltd., United Spirits Ltd., and Varun Beverages Ltd. The outperformers on the average sectoral revenue growth were Britannia, ITC, Marico, Patanjali Foods, Tata Consumer, United Spirits, and Varun Beverages.

 

Of the total 12 companies in the sector, seven met or exceeded analysts' estimates of net profit for individual companies. Five companies did not meet the consensus view and this dragged down the performance of the sector. Nine companies individually met or exceeded the Street view on revenue projections.

 

On an average, these FMCG companies reported a staggering 185.3% growth in the sector's net profit as against the 15.0% profit growth reported by the Nifty 200 companies. On an average, brokerages had predicted the Nifty 200 to report a 1% profit growth. However, ITC's reported net profit was the prime reason for the exceptional surge in the FMCG sector's profit growth. On account of the demerger of its hotels business, ITC reported a whopping INR 146.9 billion of exceptional gain, which inflated its net profit to INR 195.6 billion in Jan-Mar.

 

Discounting such one-time gains, the FMCG sector's net profit excluding exceptional items actually declined 3.2% on year as against the net profit growth, excluding exceptional items, of 11.4% for the Nifty 200 companies. Also, discounting ITC's exceptional gains from the hotel's demerger, the company's net profit was below the Street's expectations.

 

On revenue, the consumer goods sector reported 9.9% on-year growth, as against the 5.9% average revenue growth of the Nifty 200 companies. On an average, brokerages had predicted the Nifty 200 companies to report a 5.2% profit growth.

 

URBAN-RURAL DIVIDE

According to Nielsen IQ's fast-moving consumer goods quarterly snapshot report for Jan-Mar, the industry achieved an 11% on-year growth in value terms. Consumption-driven demand was attributed to a 5.1% rise in volume with a 5.6% increase in prices. A higher unit growth than volume growth indicates consumers' preference shifting towards smaller packs.

 

The consumer intelligence company is of the view that the consumer goods sector is showing mixed signals—while volume growth is slowing across categories, non-food segments are still outpacing the growth in the foods category. Inflation is easing overall, but high edible oil prices are keeping staples expensive. Rural markets continue to drive growth, whereas urban metros continue to see a shift toward e-commerce with higher shopper engagement.

 

With a favourable monsoon forecast and revised tax slabs, consumption is likely to pick up in the upcoming quarters. Interestingly, small players are gaining more ground due to a low base and changing market dynamics, though their long-term momentum remains to be seen, according to the report from Nilsen IQ.

 

Companies having more exposure to rural areas benefitted as compared to their peers as the consumption slowdown was mainly in urban centres, sector analysts said, adding that inflation in foods and wages not increasing in tandem with inflation were the key factors dampening demand.

 

EXCEPTIONAL ITEMS RULE

 

The presence of exceptional items influenced the profits of the sector to a large extent. Among the 12 companies that are part of the Nifty 200 index, only six reported on-year profit growth without exceptional items, whereas the other six reported a decline in profit without these one-time gains.

 

Patanjali Foods reported the highest net profit growth of 73.8% without exceptional items, followed by Varun Beverages at 35.2% and United Spirits at 8.7%. Marico posted a net profit growth without exceptional items at 7.9% and Britannia reported a moderate growth of 4%, followed by HUL at 3.8%.

 

Tata Consumer, on the other hand, reported the highest on-year decline in net profit without exceptional items at 30.7%. ITC's net profit, excluding one-time gains, declined 12.8% and Dabur's net profit declined 8.4%, followed by Godrej Consumer whose profit fell 8.1%. Colgate-Palmolive reported a moderate decline in net profit without exceptional items at 6.5%, followed by Nestle at 4.2%.

 

NET SALES PERFORMANCE

Varun Beverages reported the highest top line growth in the segment, kick-starting its financial year on a robust footing with net sales growth of 28.1% on-year in the March quarter, driven by strong organic volume growth in India and inorganic volume growth overseas. The uptick in the bottler's revenue was driven by growth in its consolidated sales volume to 312.4 million cases in the March quarter, from 240.2 million cases in the base quarter. Its India business registered a volume growth of 15.5%. Realisation per case in the domestic business increased 1.8% on year but remained flat in international markets, excluding South Africa.

 

Marico, which reported the second-highest segmental top line growth, trumped expectations as it registered the strongest year-on-year growth since the September quarter of 2020-21 (Apr-Mar), driven by price hikes. The company's India business registered a volume growth of 7% in the March quarter, the highest in 14 quarters.

 

Patanjali not only reported its highest ever revenue in any quarter during Jan-Mar, but also posted the third-highest net sales growth in the segment at 17.8%. Focussed mostly on rural and semi-urban parts of the country, Patanjali benefitted strongly from the rebound in rural demand. Although the company's revenue from foods and other FMCG products declined, the edible oils segment grew at a fast pace, helping the company pull up its top line.

 

Robust growth in branded sales in both international and Indian markets helped Tata Consumer report better-than-expected earnings for the March quarter, reporting a 17.4% net sales growth. Despite high tea and coffee procurement costs leading to price hikes, Tata Consumer's sales in tea, coffee, and ready-to-drink beverage categories in India were robust and the company's salt business – where it enjoys market leadership – also fared better. Salt revenue for the reporting quarter grew by 13.0% on year, led by value-added salt brands, while the company's market share increased by 30 basis points on year. The staples business under the Tata Sampann brand saw 30.0% on-year growth for the quarter.

 

Driven by a 7% increase in sales volume to 16.7 million cases and improved demand conditions due to the opening up of key markets like Andhra Pradesh, Telangana, and Uttar Pradesh, United Spirits reported a 10.5% increase in its net sales.

 

ITC's dependence on its cigarette business and price hikes in the non-cigarettes consumer goods portfolio, together with increased income from its agricultural goods' trading business, helped the company report a 9.6% increase in its net sales during the March quarter.

 

Bakery major Britannia also reported an 8.9% increase in its net sales during the March quarter, owing to phased price hikes.

 

Even though consumer demand in urban areas remained low, Godrej Consumer registered a 6% growth in sales volume from its own brands and products in Jan-Mar. This helped the company report its highest on-year growth in consolidated revenue in the past seven quarters, in line with the Street's expectations and report a net sales growth of 6.3%.

 

Primarily owing to double-digit growth in beverages and confectionery, with three of the four product groups delivering healthy growth, Nestle India's net sales for Jan-Mar rose 4.5%.

 

Industry giant HUL reported one of the lowest net sales growth among its peers, at only 2.4%. However, it was the first time since the September quarter of 2022-23 (Apr-Mar) that HUL could report a revenue growth exceeding 2%, backed by a 2% underlying volume growth. Although price hikes aided the top line growth, poor consumer demand from urban areas limited the growth potential.

 

Despite focussing on rural India, which saw a good rebound in demand, Dabur's net sales growth was only 0.6%. Dabur's topline performance during Jan-Mar was the poorest since the outbreak of the COVID-19 pandemic in India in March 2020. Although Dabur blamed poor consumer demand as the prime cause for the poor show, its peers have been positive about demand conditions in rural and semi-urban locations.

 

Colgate-Palmolive is the only company which reported a decline in net sales at 1.9%, owing to what it called softer urban demand and intensified competition.

 

The following table shows the performance of the 12 companies in the FMCG sector vis-a-vis the consensus estimate for each company as well as against the consensus estimate for the FMCG sector and the Nifty 200 index:

 

Company	PAT beat analysts' estimate	Adjusted PAT growth %	Adjusted PAT growth estimate %	PAT beat sector estimate	PAT beat Nifty 200 estimate		Revenue beat analysts' estimate	Revenue growth %	Revenue growth estimate %	Revenue beat sector estimate	Revenue beat Nifty 200 estimate
FMCG Sector		185.31	0.56					9.85	8.57
Nifty 200		15	1					5.9	5.2
Britannia Industries	YES	4.03	-3.42	YES	YES		YES	8.92	7.44	NO	YES
Colgate-Palmolive (India)	YES	-6.53	-6.98	NO	NO		NO	-1.85	1.19	NO	NO
Dabur India	NO	-8.41	-2.99	NO	NO		NO	0.55	2.00	NO	NO
Godrej Consumer Products	NO	-14.60	0.53	NO	NO		NO	6.27	6.46	NO	NO
Hindustan Unilever	YES	3.62	2.22	YES	YES		YES	2.40	-0.90	NO	NO
ITC	YES	289.66	-2.18	YES	YES		YES	9.63	4.03	NO	YES
Marico	YES	7.86	6.19	YES	YES		YES	19.84	15.44	YES	YES
Nestle India	YES	-5.22	-5.85	NO	NO		YES	4.49	4.05	NO	NO
Patanjali Foods	NO	73.78	110.26	YES	YES		YES	17.80	15.02	YES	YES
Tata Consumer Products	YES	59.19	-27.97	YES	YES		YES	17.35	15.90	YES	YES
United Spirits	YES	17.45	-23.04	YES	YES		YES	10.50	10.03	YES	YES
Varun Beverages	NO	35.22	37.08	YES	YES		YES	28.94	28.86	YES	YES

 

 

The following table shows the profit margins of the 12 FMCG companies that are a part of the Nifty 200.

 

Company	PAT Margin for Mar-25	PAT Margin for Mar-24	PAT Margin for Dec-24
FMCG Sector	35.36%	13.61%	17.55%
Nifty 200	12.93%	11.93%	12.47%
Britannia Industries	12.63%	13.23%	12.67%
Colgate-Palmolive (India)	24.27%	25.49%	22.08%
Dabur India	11.31%	12.42%	15.57%
Godrej Consumer Products	11.45%	-55.92%	13.22%
Hindustan Unilever	16.39%	16.19%	19.48%
ITC	113.41%	31.91%	33.06%
Marico	12.56%	13.96%	14.28%
Nestle India	16.09%	17.73%	14.56%
Patanjali Foods	3.70%	2.51%	4.07%
Tata Consumer Products	7.48%	5.52%	6.28%
United Spirits	15.31%	14.40%	13.78%
Varun Beverages	13.05%	12.44%	5.02%

 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

 

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