New Delhi, April 14 (NationPress) FMCG companies in India are anticipated to conclude FY25 with a modest single-digit revenue growth, as consumer staples stocks have recently gained from a shift towards safer investments, according to a recent report. The report also indicates that the base will remain supportive in FY26.

A report by BNP Paribas India predicts a slight uptick in FMCG revenue growth from 4 percent in Q3 FY25 to 5 percent in Q4 FY25.

“As trade tensions subside, there is a potential risk of reversing the recent market outperformance. However, we identify some short-term advantages, such as declining crude oil prices, and our economic heat map shows encouraging signs for rural growth,” the report stated.

Comments from Marico, Dabur, and GCPL suggest that demand has remained strong, although an urban slowdown driven by weakness in general trade persisted in Q4 FY25.

Jewelry firms are expected to report robust year-on-year sales growth in Q4, bolstered by rising gold prices, the report noted.

At the start of the year, revenue growth in the consumption sector was weak due to diminished rural demand, compounded by pricing reductions.

In the following quarters, rural growth saw a slight recovery, likely influenced by a low base, decent monsoon conditions, and elevated food prices.

“Nonetheless, this was counterbalanced by urban demand weaknesses. Consequently, we project that most companies will finish FY25 with revenue growth in the low to mid-single digits,” the report indicated.

The Indian monsoon in FY25 was 6 percent above the long-term average compared to a deficit in FY24. As a result, reservoir levels have improved. This recovery, along with a favorable base and declining core inflation, has likely contributed to the modest recovery in rural areas.

Inflation rates for vegetables and pulses showed slight easing toward the end of FY25. The telecommunications sector, another significant mass consumption area, experienced substantial price increases throughout FY25.

“In contrast to rural areas, urban markets were coming from a relatively high base. Moreover, the rapid growth of quick commerce is altering consumer consumption habits. We believe these factors may have played a role in the slowdown of urban mass consumption,” the report mentioned.

In urban India, the rapid expansion of quick commerce (QC) is posing challenges for FMCG firms. As QC companies aim to broaden their store presence swiftly and ultimately enhance profitability, “we foresee potential margin pressures for FMCG companies,” the report added.