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Informist, Tuesday, Sept. 30, 2025

NEW DELHI – Issues involved in transition to the new Goods and Services Tax rate structure are likely to have an adverse impact of 2-3% on the volumes of fast-moving consumer goods companies, according to a report by Nuvama Institutional Equities. The effect of the rejig will reflect on volumes, margins, and working capital days of companies for the September quarter, the brokerage said. 

This adverse impact is expected to reverse from November, as per the brokerage. The report suggests tax credit may remain unutilised in many companies as refund is not allowed in case of services such as adverstising and promotion, logistics, and outsourced vendor-related services. "Companies eventually are likely to factor this in pricing," the brokerage said.

The report comes after sectoral bellwether Hindustan Unilever Ltd. last week said that due to the transitory impact of the recent GST reforms, its consolidated business growth for the September quarter is expected to remain flat to low single-digt. Based on the existing pipeline inventory in channels, HUL expects the impact to continue into October as well. Both HUL and Nuvama see the reform measure as eventually fuelling consumption. 

Nuvama also cited heavy rains as another factor that played spoilsport in the September quarter, particularly for the summer portfolios of companies. Summer categories that are likely to have taken a hit in the September quarter include carbonated drinks and juices, beer, summer care products, ice creams and frozen desserts, and home insecticides. Further, heavy rains also likely postponed painting activities, thereby delaying demand. "We reckon it shall rebound in H2FY26 (Oct-Mar)," the brokerage said.

Nuvama also sees the turmoil in Nepal as a slight negative for most companies. "Most of the listed Indian consumer staples companies operate in Nepal via the Indian listed entity, so there can be slight overhang for most names," it said.

STAR PERFORMERS, LAGGRDS

On the performance for Jul-Sept, Nuvama placed Bikaji Foods International Ltd., Marico Ltd., Tata Consumer Products Ltd., Britannia Industries Ltd., Pidilite Industries Ltd., United Spirits Ltd., and CCL Products (India) Ltd. in the 'top-tier' classification. Meanwhile, Emami Ltd., Colgate Palmolive (India) Ltd., United Breweries Ltd., Varun Beverages Ltd., Godrej Consumer Products Ltd., and Indigo Paints were likely the laggards in the quarter, as per the brokerage.

According to Nuvama, Marico and Bikaji Foods, Tata Consumer, Britannia, and CCL Products led revenue growth during the September quarter, while Pidilite and United Spirits, besides Bikaji Foods and Marico led volume growth. 

Going forward, amid predictions of a harsh winter this year, Nuvama expects strong demand for immunity and skin care products with weakness in demand for carbonated soft drinks and juices. On the raw materials front, the brokerage expects tea costs to remain benign for the next one year. A gradual recovery in Tata Consumer Products' and HUL's tea businesses is expected from the December quarter, Nuvama said. Meanwhile, copra prices remain at elevated levels. "We expect another round of price hikes for Marico's Parachute business," the brokerage said. Nuvama also expects companies to evenually consider passing on a part of higher palm oil prices to consumers. Prices of this key commodity are up around 16% from the lows seen in May, it said.  End

Reported by Shakshi Jain

Edited by Avishek Dutta

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