Indian FMCG: Growth Slows Amid Inflation

Indian FMCG companies are preparing for a mixed Q2FY27 earnings season. A softer comparative base from the previous year and strategic price adjustments are expected to bolster topline growth. However, ongoing inflation in raw materials is likely to exert pressure on profit margins.

HSIE Research has maintained an underweight stance on the sector, citing reduced earnings visibility and a potentially weakening competitive advantage. While revenue growth is projected to improve in the September quarter, the brokerage remains selective in its stock recommendations, emphasizing the importance of strong execution.

Companies like ITC, Bikaji Foods, and Gopal Snacks are forecasted to see year-on-year earnings declines. In contrast, HUL, Dabur, and Emami may achieve single-digit earnings growth. Nestlé India, Marico, Colgate-Palmolive, and Honasa Consumer are anticipated to show stronger earnings momentum, supported by margin expansion.