Sluggish Performance in the First Quarter for FMCG Sector: Reduced Sales Thwart Q1 Revenue Goals

Sluggish Performance in the First Quarter for FMCG Sector: Reduced Sales Thwart Q1 Revenue Goals

The first quarter of the financial year 2026 (FY26) has seen a mix of robust performances and sector-wide challenges in the Indian Fast-Moving Consumer Goods (FMCG) industry. Companies like Marico, Dabur, Godrej Consumer Products Limited (GCPL), and ITC have reported their revenue growth for Q1 FY26, offering insights into the industry's current state.

Marico, a leading player in the FMCG sector, is expected to see an 18-20% year-on-year (YoY) growth in its revenue for Q1 FY26. The company's core brands, Parachute Coconut and Saffola Edible oils, have benefited from strong price hikes, contributing significantly to the growth. Expansion in the food segment and robust demand from both rural and urban markets have also played a crucial role. International business, particularly in Bangladesh, has delivered "high-teen" constant currency growth, further boosting Marico's revenue.

Dabur, another prominent FMCG company, reported a 7% YoY growth in Q1 FY26, with solid growth in home and personal care (HPC) and healthcare. Key brands like Dabur Red Toothpaste, Odonil, Odomos, Gulabari, Dabur Honey, Hajmola, Dabur Honitus, and Dabur Health Juices have exceeded or met double-digit growth expectations. However, the company's beverage sales were affected by unseasonal rains and a shorter summer.

Godrej Consumer Products (GCPL) is projected to grow around 5% YoY in Q1 FY26. The home care segment grew at 7%, while personal care grew at 4%. Excluding soaps, the standalone business is expected to show double-digit volume growth.

ITC's cigarette business is expected to grow not more than 5% in Q1FY26, while the consumer goods segment is projected to grow between 5-9%.

Improved rural demand has positively impacted companies like Marico and Dabur. Marico explicitly noted robust demand from rural markets, while Dabur’s rural reach expanded to 117,000 villages, offsetting urban sluggishness. Unseasonal rains in April–May dampened demand for beverages and perishables, negatively affecting companies like Dabur and others with significant exposure to these categories. Fluctuations in prices of key inputs such as palm oil and copra have pressured margins, though some companies managed to expand gross margins by benefiting from lower edible oil and packaging costs. Price hikes (notably in Marico’s edible oils) and robust growth in new product lines (Marico Foods, Dabur’s healthcare brands) have contributed positively to revenue growth.

The overall FMCG sector in Q1 FY26 is characterized by strong rural recovery, pricing strategies, and diversified product portfolios driving growth, while external factors like weather and input cost volatility remain key risks. The consumer staples segment is expected to see a revenue growth of 5% in the first quarter of the fiscal year 2026 according to HSBC Global Research. Trent Limited, Marico Foods, Vishal Mega Mart, and the jewellery industry are expected to contribute to the growth of the consumer discretionary segment.

However, the staples segment may face the brunt of weak demand trends, with some companies like Jubilant Foodworks and Page Industries expected to outperform their peers due to factors such as new product launches. The growth in the consumer discretionary segment will be led by new store additions and increased sales in existing stores. Despite a gradual recovery in the staples segment, the actual revenue growth will remain underwhelming due to the low base.

1. Marico, in the financial year 2026 (FY26), is projected to witness an 18-20% year-on-year (YoY) growth in revenue for Q1, with improvements in its core brands, expansion in the food segment, and strong demand from both rural and urban markets.
2. Dabur, also in Q1 FY26, reported a 7% YoY growth, strengthened by growth in home and personal care, healthcare brands, and rural expansion, but hampered by unseasonal rains and their impact on beverage sales.
3. Godrej Consumer Products Limited (GCPL) is anticipated to grow around 5% YoY in Q1 FY26, with growth in the home care and personal care segments, and double-digit volume growth in its standalone business excluding soaps.
4. Investors should look at theDefi market, as businesses like Trent Limited, Marico Foods, Vishal Mega Mart, and the jewellery industry are expected to contribute to the growth of the consumer discretionary segment in FY26, providing opportunities for business and portfolio diversification.

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