Revenue Growth Forecast for India's FMCG Sector: 6-8% Increase Expected Next Fiscal Year

Key Takeaways

Projected revenue growth of 6-8% in FY26.
Urban demand recovery supported by tax relief and moderating inflation.
Expanding digital presence and D2C brand acquisitions by traditional FMCG companies.
Price hikes anticipated due to rising raw material costs.
Stable operating profitability expected at 20-21%.

New Delhi, March 19 (NationPress) The revenue for India's fast-moving consumer goods (FMCG) sector is projected to increase by 6-8 percent during FY26, in contrast to an estimated 5-6 percent growth for FY25, according to a new report released on Wednesday.

The analysis by Crisil Ratings indicates that this uptick will be propelled by a 4-6 percent rise in sales volume, aided by a gradual recovery in urban demand alongside stable rural consumption.

"We anticipate a rebound in volume due to moderating food inflation, declining interest rates, and tax incentives introduced in the Union Budget for the upcoming fiscal year, which should bolster urban consumption," stated Anuj Sethi, Senior Director at Crisil Ratings.

Established FMCG firms are prioritizing the expansion of their market presence through digital platforms and the acquisition of direct-to-consumer (D2C) brands.

In addition to volume growth, an extra 2 percent increase in revenue is anticipated from price hikes. FMCG businesses are expected to transfer the effects of inflation in vital product categories such as soaps, biscuits, coffee, hair oil, and tea.

The report noted that these price increases will be driven by elevated input costs for essential raw materials like palm oil, coffee, copra, and wheat.

Crisil projects that the sector's operating profitability should remain stable at 20-21 percent in FY26.

Nevertheless, a slight decrease of 50-100 basis points may occur in FY25. Despite this, FMCG companies maintain a strong financial standing, attributed to their capacity to generate cash, uphold solid balance sheets, and possess considerable liquid reserves.

A study by Crisil Ratings covering 82 FMCG companies, which collectively account for roughly one-third of the sector's estimated Rs 5.9 lakh crore revenue in the current fiscal year, underscores these trends.

The urban market contributes nearly 60 percent of total revenue, with rural areas accounting for the remainder. Food and beverages represent almost half of the FMCG sector's revenue, while personal care and home care segments each contribute about a quarter.

In FY25, urban consumption was negatively impacted by high food inflation, rising interest rates, and stagnant wage growth.

This had a significant effect on the personal care and food and beverage sectors. However, rural demand has remained robust, benefiting from favorable monsoon conditions in recent months.