14 Per Cent Sequential Growth In Net Sales Of FMCG Sector: SBI Research

In the first quarter of the fiscal year 2023, SBI research reported a 3 per cent growth in the top line for 4000 listed entities.  A decline of 2 per cent was also recorded in EBIDTA on a sequential basis.  There was a surge of 41 per cent on year-on-year as well as a 20 per cent surge in PAT which was led by banks, Auto, Fertilizers, Chemicals, FMCG, etc.

“FMCG sector, as reported by around 80 listed entities, reported 14% sequential growth in net sales,” the research read.

Due to the rising inflation exerting pressure on the FMCG share wallets, this sector has been continuously witnessing tepid demand.

“It is natural for consumers, in such inflationary scenarios, to feel the pinch of increased pressure on their wallets and they adjust volumes and prioritize essentials over discretionary spend to manage the household budgets,” the research read.

In the first quarter of fiscal year 2023, a growth rate of 8.1 per cent was recorded for Dabur in its consolidated revenue whereas the domestic FMCG volume grew by 5 per cent in the same period. Notably, the consumers made a shift to affordable smaller packs of branded consumer goods.

“Domestic revenue at HUL grew YoY by 19 per cent led by price while underlying volumes growth of 6%. Rural growth continues to lag growth in urban markets. Further, Marico also reported a quarter of de-growth both in value and volume terms,” the research read.

Due to a steady decline in immunity-led categories like honey, a slow quarter has been observed for the food business.

In Q1FY23, Nestle recorded a growth of 16.4 per cent. “Interestingly, while around 15 per cent of growth is reported in Metro and Megacities, 30.7 per cent growth is reported in villages, 70 per cent+ population occupation is agriculture,” as per the research.

Since the present quarter was impacted due to an overall rural slowdown and the pressures of inflation, companies are optimistic about the trends improving. The research predicts that the near-term growth would be price-led, and that inflation would continue to impact consumption till it starts to decline meaningfully.