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India Inc. Braces for Inflationary Tide
8 Apr
Summary
- Mounting inflation and rising input costs loom for Indian companies.
- Crude oil prices and supply chain disruptions are key concerns.
- A below-normal monsoon could impact rural demand significantly.
Indian consumer-focused companies, largely shielded in the March quarter, now face mounting inflationary pressures and rising input expenses. The West Asia conflict, though brief in the last quarter, has elevated crude oil prices, signaling potential price hikes ahead. Godrej Consumer Products projects a 6-9% cost impact due to Brent crude and palm oil prices, planning to manage this through pricing adjustments and operational efficiencies.
Persistent inflation is forecasted through the first half of FY27. Concerns are amplified by a predicted below-normal monsoon, which could dampen rural demand, a key growth driver for FMCG companies as urban consumers face stagnant incomes. Dabur is actively monitoring geopolitical shifts and implementing cost-management strategies.
Marico anticipates double-digit operating profit growth but highlights the ongoing impact of West Asia developments on input costs. Jubilant FoodWorks' Domino's India experienced minimal like-for-like growth, attributed to commercial LPG supply shortages affecting over 95% of its outlets.
