FMCG Growth Accelerates to 15.1% In Q1FY27, Anand Rathi Sees Better Margins & Attractive Valuations

Mumbai: India’s fast-moving consumer goods (FMCG) sector recorded stronger growth in the first quarter of FY27, helped by price increases and steady sales volumes, according to Anand Rathi Research.

FMCG revenue grew 15.1 percent year-on-year during the quarter, compared with 10.7 percent in Q4FY26. The paints segment expanded 14.2 percent, improving from 7.6 percent in the previous quarter.

Balanced Recovery

Growth was supported by mid-to-high single-digit volume expansion and average price increases in the mid-single digits. GST cuts, improving consumer sentiment, premium products and wider distribution networks aided the recovery.

Foods, personal care and home care products led volume growth. This was the second straight quarter of sequential improvement, indicating that demand recovery is gaining strength.

Paints, QSRs Shine

Paint and quick-service restaurant companies continued their healthy performance from the second half of FY26. Paint demand benefited from the extended summer, while restaurants reported better same-store sales growth due to a stronger dine-in business.

Paint companies expect double-digit value growth in FY27, supported by price hikes of 10-15 percent in decorative paints, higher volumes and delayed festival demand. Organised companies are also expected to gain market share.

Calibrated Pricing

FMCG and paint companies raised prices gradually across products and pack sizes. Larger packs and premium products absorbed most increases.

Companies largely protected Rs 5 and Rs 10 entry-level packs to support demand in rural and price-sensitive markets. In some cases, they reduced product quantity instead of raising prices. Further staggered increases are likely in the coming quarter.

Margin Outlook

Margins remained steady or improved despite higher crude oil, palm oil and freight costs. Price hikes, cheaper inventory, better product mix, cost savings and lower advertising expenses provided support.

The recent moderation in crude prices below $100 per barrel could improve margins during the second half.

Anand Rathi expects its 16 covered companies to deliver nearly 10 percent revenue CAGR and 15 percent earnings CAGR over FY26-FY28. It prefers Marico with a Rs 990 target, GCPL at Rs 1,400, Mrs Bectors Food at Rs 250 and Asian Paints at Rs 3,180.

Disclaimer: This article is for informational purposes only and does not constitute investment advice; consult a qualified financial adviser before investing.