In the first quarter of fiscal 2023, SBI research reported revenue growth of 3% for 4,000 listed entities. A 2% decline was also recorded in EBIDTA on a sequential basis. There was a 41% year-over-year increase as well as a 20% increase in PAT, which was led by Banks, Automotive, Fertilizers, Chemicals, Commodities consumer goods, etc.
“The FMCG sector, as reported by approximately 80 listed entities, experienced 14% sequential growth in net sales,” the research says.
Due to rising inflation putting pressure on FMCG stock portfolios, this sector has continuously seen lukewarm demand.
“It is natural for consumers in such inflationary scenarios to feel the pinch of increased pressure on their wallets and they adjust volumes and prioritize the essentials over discretionary spending to manage the household budget” , indicates the search.
In the first quarter of fiscal 2023, a growth rate of 8.1% was recorded for Dabur in its consolidated sales, while the domestic volume of FMCG increased by 5% during the same period. Notably, consumers have opted for smaller, affordable packages of branded consumer goods.
“HUL domestic revenue increased 19% year-on-year, driven by pricing, while underlying volumes increased 6%. Rural growth continues to lag behind the growth of urban markets. Additionally, Marico also reported a quarter decline in both value and volume,” the research reads.
Due to a steady decline in immunity-focused categories like honey, a slow quarter was seen for the food sector.
In the first quarter of FY23, Nestlé recorded growth of 16.4%. “Interestingly, while about 15% of growth is reported in metropolises and megacities, 30.7% growth is reported in villages, 70% and more of the population’s occupation is agriculture” , according to the research.
Given that this quarter has been impacted by an overall rural slowdown and inflation pressures, companies are optimistic about improving trends. The research predicts that near-term growth will be driven by prices and that inflation will continue to impact consumption until it begins to decline significantly.