Weak rural demand to mar Dec quarter for FMCG firms
Dabur India and ITC in the December quarter will be seen as a proxy for the broader consumer sentiment in India. Analysts said companies expect the upcoming general elections and a further reduction in inflation to shore up demand in FY25.
“Upcoming union budget on 1 February may spring some surprise given this is an election year. An undemanding base coupled with continued momentum in construction activity and taming inflation should support consumption, particularly rural and bottom of the pyramid, through the course of the year," analysts at Jefferies said.
Sales of fast-moving consumer goods swung from high growth rates at the start of the year to a "cautious" end post-festival season, said Akshay D’Souza, chief of growth and insights at retail intelligence platform Bizom. Bizom is yet to release December quarter numbers of retailers.
Meanwhile, makers of alcoholic food and beverages as well as fast food chains are expected to report mixed results. While fast food chains benefitted on significant days such as Diwali and the World Cup final, liquor demand suffered in the mass market.
“The demand environment continues to be under pressure, given the festival season and Cricket World Cup have been unable to bolster demand in the quick service restaurant (QSR) space," said Karan Taurani of Elara Capital. “This was due to the fact that most India-based matches fell on the weekend when demand is strong, rising competition in the pizza segment, high base, and weak consumer demand; cooling inflationary pressures added some respite for QSR chains." Taurani said that while beer volume growth may see a decline quarter-on-quarter due to seasonality, India’s alcoholic beverage segment has seen good volume growth in the more
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