The consumer staples space in India may turn out to be one of the best performers in the July-September quarter of FY27, with a handful of companies including Nestle India, Marico and Tata Consumer Products catching the eye of brokerage Nomura. Its latest report states consumer staples’ sales may rise 13.8% YoY in Q2 FY27, well ahead of the eight-quarter average of ~9%.
FMCG companies expect the near-term growth will be driven by the currently steady consumer volumes and the carry-over effect of price increases implemented last quarter. It may further squeeze gross margins if the cost of raw materials and packaging material remains high.
FMCG sector Q2 FY27 outlook
Nomura forecasts that volume growth in the consumer staples segment will stay generally flat quarter-over-quarter. And it anticipates that pricing growth will accelerate as firms start to get the full effect of past price increases.
“Firms have increased prices, but overall, product-price rises have been below input-cost inflation,” the brokerage added. “Price increases in packaging-related categories have been one of the biggest areas of concern for FMCG producers.
However, operating leverage should still support companies’ EBITDA margins to hold broadly at the same levels as in the previous quarter.
Nestle India Q2 growth expectations
Companies like nestle india that are expected to see a good revenue growth during Q2 FY27. According to the Nomura forecast, the company is expected to report over 20% revenue growth backed by high-teens volume and mix growth.
Nestle India is likely to see around 35% rise in EBITDA according to the broker. The results will be under scrutiny of high input costs.
Eightl Nov 2022 10:38 AM IST | Source: 28 India & World | Posted by: Sonali Agrawal Nestle India is likely to announced its unaudited results for the quarter ended September 30, 2026 at its board meeting on 15 October.
A Marico was a net importer of copra and other plantation commodities.
Another FMCG company where one might see some decent operating performance in Q2 FY27 is Marico. Nomura expects volume growth at approximately 8.5% for the company and sales at about 13%.
Among significant reasons that sustain margins at Marico is the low copra price. Nomura says that copra prices are about 32% lower than a year ago, which could ease off the pressure on the company’s costs. The brokerage estimates Marico’s EBITDA to grow by more than 25%.
Some of the slowdown in sales growth compared to what has been a 20-plus percent growth rate since the previous quarter has to do with a further undoing of earlier pricing actions.
Tata Consumer Products revenue outlook
Tata Consumer Products is likely to stay among the major themes of Q2 earning season. As per Nomura, Tata Consumer Products could clock a 12.5% revenue growth with EBITDA margin expansion to 14% from 13.5% in Q1 FY27.
Tata Consumer enters FY27 on a strong note. Tata Consumer reported 12% YoY revenue growth in Q1 to Rs 5,349 crore, and consolidated EBITDA up 19% to Rs 730 crore in Q1. It had underlying volume growth of 13% in its India branded business.
Its growth engines – Tata Sampann, ready-to-drink beverages and newer categories – are also gaining prominence in the mix.
Rising commodity costs remain a key risk
Input costs may cause pressure on FMCG Nomura anticipates year on year gross margin decline for a number of staples companies as producers deplete inventories bought at higher prices. Though revenue growth is still likely to be upbeat.
Commodity trends are mixed. Copra prices are down sharply, thereby proving to be a boon for Marico, while palm oil remains elevated on a yoy basis. Packaging costs continue to come under pressure amid higher crude linked costs.
This results in a distinct margin mix for each FMCG company, with variations based on product composition and commodity exposure.
Rural demand and monsoon remain watch points
“For H2 FY27, rural consumption will remain a key for the sector,” said Nomura, adding below-normal southwest monsoon rain could be a key monitorable.
The brokerage added that the cumulative southwest monsoon rainfall was about 12% lower than the long period average till the time of its assessment and that the ongoing drought in some areas of Maharashtra and Karnataka could impact demand in rural areas. The report also mentioned the likelihood of El Nio in the next few months up to the beginning of 2027.
If rural consumption weakens, it could affect volumes in categories that span packaged foods and beverage products, as well as personal care items.
What investors will watch in Q2 FY27
The new earning season should shed more light on whether FMCG companies will be able to grow volumes even as they levy additional input costs on consumers.
For Nestle, revenue and volume momentum along with margins will be key. For Marico, focus will be on how much of the benefit from lower copra prices is passed on to the margin. How Tata Consumer’s volume growth, margin trend and contribution from growth businesses shape up will be keenly tracked.
Nomura expects the broader consumer industry to remain vulnerable to a demand and margin environment. Its analysis suggests that positioning (pricing power, brands, portfolios and operating execution) will be critical as companies adjust to commodity moves.
