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Informist, Friday, Oct. 24, 2025

 

By Avishek Rakshit

 

KOLKATA – Improvement in demand with some uptick in consumption in urban areas gave companies in the consumer goods sector a much-needed leg-up in their September quarter performance. However, early onset of the monsoon season took a toll on sales of beverages and summer products and the cut in Goods and Services Tax added to the woes of companies operating in the personal care and food products categories.

 

An early onset of monsoon dampened sales of beverages and the extended monsoon hit sales of household insecticides as nearly 91% of the area in the country received normal to excess rainfall. This phenomenon, which affected demand for beverages and summer products, increased the competitive intensity in the industry with some companies such as Varun Beverages Ltd. resorting to promotions and discounts to protect its market share. Sales of air-conditioners, coolers, and fans fell, which affected the top lines of Voltas Ltd. and Havells India Ltd., among others.

 

As sales growth in rural India continued to be higher than that in urban centres, companies with a wider exposure to tier-2 towns such as Patanjali Foods Ltd., Dabur India Ltd. and a few others benefited to some extent.

 

The consumer goods industry would have probably sailed down the path of gradual top line recovery had the GST cut not happened just before the onset of the festival season. Consumer goods companies rely a lot on festival sales as it not only creates pent-up demand which boosts top line, but because companies also line up substantial product launches and stock inventory with stockists to maximise sales during this period. Although the government had said GST rates may be cut in August, and though this was an anticipated move, it was already too late for the consumer goods companies to revise their inventory levels as stocking up of products with trade channels starts as early as mid-July.

 

The aggregate net profit of the 17 consumer goods and durables companies that are a part of the Nifty 200 index is likely to rise 4.3% on year in the September quarter and their revenue is likely to rise 9.3% on year, according to the average of estimates from 20 brokerages.

 

This expected on-year profit performance of the consumer industry is notably better than the June quarter when the reported aggregate net profit of the same set of companies had risen only 2.8% on year. However, the reported revenue growth of these companies in the June quarter was higher at 18.5% as compared to the 9% growth expected in the September quarter.

 

Of the 17 consumer goods and durables companies in the Nifty 200, 10 are expected to report an increase in their net profit for the September quarter, five are expected to report a fall in net profit, and two are expected to report a profit growth of less than a percentage point. This will be somewhat akin to the performance of these companies in the September quarter of 2024, when 10 companies out of these 17 had reported a profit growth and five had reported a fall in their profit. Two companies had then reported flat profit growth.

 

However, on the revenue front, consumer goods companies are expected to take a beating in the September quarter. As many as three companies, including heavyweights ITC Ltd. and Voltas Ltd., are expected to report a decline in their top line as against just one company – Dabur – posting a revenue decline in the year-ago quarter.

 

In the pure play consumer goods sector - which includes foods, personal care, beverages, and alcoholic beverages – there are 12 companies that account for 64% of the sector's projected revenue. The aggregate top line of these 12 companies is expected to increase 4.3% on year, but the bottom line is likely to decline marginally on year in the September quarter. Despite demand improving on a trailing basis, the consumer goods sector continues to face urban demand headwinds particularly in the mass products segment.

 

Four large companies in the consumer goods sector - Dixon Technologies (India) Ltd., Hindustan Unilever Ltd., ITC Ltd., and Titan Co. Ltd. - account for 52% of the estimated total revenue and 62% of the expected net profit and heavily influence the overall performance of the sector.

 

HUL, which alone accounts for 13% of the total estimated revenue for the sector in the September quarter, was expected to report an over 2% on-year rise in revenue and its net profit was expected to fall 5.8% on year. On Thursday, the country's largest consumer goods company reported an increase of 3% on year in its net profit for the September quarter to INR 26.9 billion. The net profit included a one-time income of INR 1.84 billion. The company posted on-year growth of 0.5% in revenue from operations at INR 155.9 billion. Diversified consumer goods company ITC – the largest cigarettes maker in the country – may see its revenue fall by around 2% on year in the September quarter on account of destocking in its trade channels but its profit is likely to rise over 2% on year.

 

Oral care major Colgate–Palmolive (India) Ltd., which also announced its September quarter earnings Thursday, reported its steepest on-year fall in its bottom line since the December quarter of 2016 as its performance was affected by a transitory disruption in its sales channels due to the cut in GST. The company's net profit for the quarter fell more than 17% on year to INR 3.28 billion. Revenue from operations fell over 6% on year to INR 15.20 billion.

 

Foods major Britannia Industries Ltd. – which is focussed on increasing its market share for the past several quarters now – is expected to see a 6% on-year rise in revenue driven by higher sales volume despite the destocking which will also boost the profit by 11%. Tata Consumer Products Ltd. – the second-largest tea retailer in the country –is likely to see its top line go up by over 13% on year but its profit is estimated to fall 22% on year.

 

Titan -- the country's largest jeweller -- is likely to see its consolidated sales go up by 17% on year on strong jewellery sales and operational efficiency and this top line increase is expected to push profit up by around 52% on year. Another jewellery major, Kalyan Jewellers Ltd., is also expected to report a healthy 28% growth in its top line and its bottom line may double on year in the September quarter.

 

Dixon, which is on track towards achieving its 40 million-42 million smart phone sales volume target for the current financial year, has already posted a 29% on-year growth in consolidated revenue to nearly INR 149 billion, beating the Street expectation of INR 148 billion. The bottom line for the reporting quarter rose over 70% on year to INR 6.7 billion and beat the profit estimate of INR 2.93 billion by a wide margin. 

 

However, a short summer and early arrival of monsoon may see companies such as Varun Beverages Ltd. – the licensee of PepsiCo Holdings for India and parts of Africa - and Voltas – India's largest air conditioning company - report weak earnings for the September quarter. Usually, demand for products such as aerated soft drinks and air conditioners goes up when the mercury soars and humidity peaks. However, this year the La Nina weather phenomenon shortened the summer. Varun Beverages is expected to report a 1% on year decline in sales but cost improvement measures and overseas performance may boost the profit by over 5% on year.

 

Voltas, on the other hand, may not have a good September quarter. Its revenue is expected to fall around 8% on year and the profit is expected to decline 26% on year as sales of air conditioners fell.

 

Although the goods and services tax on most food and personal care categories came down to 5% from 12%-18?rlier, sales of consumer companies were hit in the September quarter. Retailers focussed on liquidating their stocks on which a higher tax had been paid and online platforms resorted to deep discounting, thereby creating an imbalance. Effectively, nearly all consumer goods companies faced a temporary slowdown in secondary sales immediately after the announcement that GST would be cut and till the cut actually came into effect.

 

Following are the Jul-Sept earnings estimates from 20 brokerage firms for the 17 companies in the consumer sector that are a part of the Nifty 200 index:

 

Company name	Sales, INR million	PAT, INR million	Sales Y-o-Y Change %	PAT Y-o-Y Change %	Sales Q-o-Q Change %
Britannia Industries +	49,455	5,904	5.95	11.06	6.99
Colgate Palmolive	15,415	3,338	-4.79	-15.52	7.49
Dabur India +	32,116	4,536	6.04	6.72	-5.67
Dixon Technologies (India) +	1,47,660	2,933	28.02	62.71	15.04
Godrej Consumer +	38,881	4,905	6.05	-1.33	6.18
Havells India	48,241	3,140	6.42	15.20	-11.29
Hindustan Unilever	1,58,427	24,765	2.16	-5.76	-0.55
ITC	1,95,120	50,885	-1.75	2.26	-7.35
Kalyan Jewellers India+	77,751	2,616	28.19	100.30	6.97
Marico +	34,352	4,214	28.95	-0.37	5.41
Nestle India	53,368	7,234	4.56	4.01	4.72
Patanjali Foods	91,440	3,084	12.14	-0.19	2.74
Tata Consumer Products +	47,691	3,641	13.16	-22.05	-0.20
Titan Co	1,54,782	10,699	17.13	51.75	6.28
United Spirits	30,636	3,663	7.76	9.34	20.19
Varun Beverages +	48,826	6,523	-1.00	5.27	-31.84
Voltas +	24,105	992	-7.97	-25.99	-38.80
Total	12,48,267	1,43,070	9.28	4.25	-0.85

 

Estimates from: Anand Rathi Share and Stock Brokers Ltd., Antique Stock Broking Ltd., Centrum Broking Ltd., Dolat Capital Market Pvt Ltd., Elara Securities (India) Pvt Ltd., Emkay Global Financial Services Ltd., HDFC Securities Ltd., HSBC Global Research., ICICI Securities Ltd., IIFL Capital Services Ltd., JM Financial Institutional Securities Pvt. Ltd., Kotak Institutional Equities, Motilal Oswal Financial Services Ltd., Nirmal Bang Equities Pvt. Ltd., Nomura Equity Research, Nuvama Wealth Management Ltd., Prabhudas Lilladher Pvt. Ltd., Sharekhan Ltd., Systematix Shares and Stocks (India) Ltd. and YES Securities (India) Ltd.

 

End

 

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

 

Edited by Ashish Shirke

 

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