FMCG firms bet on volume-led growth as easing inflation seen improving margins in FY27
India
’s leading fast-moving consumer goods companies expect growth to shift towards volumes in FY27, as easing inflation and softer commodity prices begin to reduce cost pressures and support margin recovery.Industry executives said the operating environment has turned more favourable after several volatile quarters, with mid- to high single-digit volume growth already reported by major FMCG players in the December quarter, according to PTI.Key raw materials such as edible oils, wheat, copra and surfactants have softened, while macroeconomic factors including GST rationalisation, higher minimum support prices (MSPs) and a healthy crop season are expected to aid consumption recovery.Most companies implemented calibrated price hikes earlier in the fiscal year and now anticipate demand expansion to be driven largely by volumes rather than pricing gains.
Some players also indicated they may pass on part of the input cost benefits through consumer offers, higher grammage or selective discounts while remaining cautious about residual impacts of earlier price increases.Companies including Dabur, Marico, Britannia, Hindustan Unilever Ltd (HUL) and Godrej Consumer Products Ltd (GCPL) expect EBITDA margins to improve as inflation cools and consumer sentiment strengthens.“As far as inflation is concerned, we saw huge inflation in Quarter 3.
Inflation is ebbing a bit, as we see.
Coconut oil prices are softening, SLES prices are softening, and vegetable oil prices are also softening.
So, the next year growth is going to be more volume-driven growth and not so much price-driven or value-driven growth,” said Dabur India CEO Mohit Malhotra in the latest earnings call, PTI quoted.Malhotra added that price increases will still have some effect as hikes implemented earlier in September continue to roll over into upcoming quarters.FMCG companies also reported sequential improvement in urban demand, while rural markets continued to outperform with faster growth momentum.Marico MD & CEO Saugata Gupta said the company sees a “gradual recovery in consumption, supported by moderating inflation, improved affordability following the recent GST rate rationalisation, higher MSPs, and a healthy crop sowing season.“We believe these factors provide a constructive backdrop for demand improvement across both urban and rural markets in the coming quarters,” Gupta said.The company aims to sustain volume growth even as pricing growth moderates, and expects operating profit growth to improve as input cost pressures ease.“With input cost easing and margin pressure subsiding, we expect progressive improvement in operating profit growth rates over the coming quarters,” Gupta told investors, adding that copra prices have corrected by 25–30 per cent after an abnormal rise.Britannia Industries also highlighted favourable commodity trends supporting profitability.“Commodity prices have been stable for us.
If you take a look at wheat flour, which is very important, it actually came down marginally in Q3 ’26.
And as we know that February and March are critical seasons for wheat, and based on this we will see how it behaves going ahead in the future, but at the moment, it looks to be stable,” said Britannia Industries MD & CEO Rakshit Hargave.HUL said the operating environment and underlying demand are showing a “steady improvement”.“Consumer confidence, as evidenced by the RBI consumer survey, is also seeing a consistent improvement signifying a recovery in consumer sentiment and willingness to spend,” said CEO & MD Priya Nair during the earnings call.HUL expects FY27 to outperform the current fiscal year.“Looking ahead, we expect the operating environment to remain conducive for a sustained recovery in consumption… we expect growth in financial year’27 to be better than financial year’26,” said CFO Niranjan Gupta.Godrej Consumer Products Ltd remains confident of maintaining high single-digit consolidated revenue growth.“Our India business is expected to deliver continued growth performance while holding normative EBITDA margins in the coming quarter,” said GCPL MD & CEO Sudhir Sitapati.The company also expects its GAUM (Godrej Africa, USA and Middle East) business to deliver double-digit revenue and profit growth, despite temporary macroeconomic and pricing pressures in Indonesia and Latin America.“At a consolidated level, while temporarily macroeconomic and pricing pressure in Indonesia and Latam may have moderated the full year EBITDA growth, we remain confident of a robust exit trajectory and sustain profitability momentum into FY’27,” Sitapati said, adding, “we expect this trajectory to sustain through Q4 FY’26”.
