FMCG sector expected to grow at 7-9%; urban demand to take lead: Crisil Rating

livemint.com:

demand in the rural regions started rebounding in the last quarter of fiscal 2022-23 after being negative for six consecutive quarters. "This was supported by growing rural income in the last two quarters, coupled with falling rural inflation levels.

Demand recovery is expected to sustain this fiscal with continuing moderation in inflation, healthy hike in minimum support prices for key crops, and stable non-agricultural income indicators," it added. The urban areas, which experienced significant growth in the past two financial years, will play a crucial role in driving overall growth in the current financial year.

This can be attributed to factors such as rising disposable incomes, the continuous expansion of e-commerce, the development of contact-based services, and advancements in the premiumisation of home care and personal care sectors. Aditya Jhaver, the Director at CRISIL Ratings, suggests that while revenue growth will differ among product segments and companies, it will predominantly be influenced by the volume of sales.

"While the food and beverages are expected to grow 9-10 percent this fiscal, home care should slow to 6-7 percent after price cuts. Personal care will see continued traction growing at 7-8 percent, owing to revival in rural demand and steady urban demand," Jhaver added.

Crisil Rating also warned of the possible disruptions caused by sharp movement in the prices of agri-based and crude-linked raw materials and also cautioned that the impact of El Nino on farm income needs monitoring. (With ANI inputs)