loader2
Login Open ICICI 3-in-1 Account

Open ICICI
3-in-1 Account

Manage your Savings, Demat and Trading Account conveniently at one place

+91

BLOG

FMCG – GST cut and rural recovery to improve growth trajectory in Q3

ICICIdirect Research 09 Jan 2026 DISCLAIMER

Overall performance
Q3FY26 will mark with the absolute recovery in the performance of FMCG companies with benefits coming in from recent GST cuts in most of the staple products and recovery in the rural economics.
Domestic companies’ volume growth for most companies is expected to improve to QoQ basis.
Key input prices such as tea, coffee, copra and crude derivatives have witnessed sequential dip, which will help the gross and EBIDTA margins to improve on sequential for most companies under our coverage. Some companies might also witness YoY improvement in the EBIDTA margins on low base.
Food companies are expected to post better performance compared with home care companies; likely to deliver double digit revenue growth largely driven by volume growth.

Food
Nestle India and Tata Consumer products (TCPL) revenues are expected to grow by 10.5% and 11.5% respectively. TCPL is expected to post good expansion in the margins due to correction in the domestic raw tea prices.

Home and personal care
Marico’s consolidated revenues are expected to grow in high twenties; Domestic volume growth will remain at high single digit, 30% correction in the copra prices will help margins to improve sequentially; EBIDTA to grow in double digits.
Godrej consumer products (GCPL) revenues to grow in double digit; domestic volume to recover to double digit; standalone EBIDTA margins to return to normative range of mid-twenties from low twenties.
GST cut in soaps and other key product categories will help HUL’s volumes to grow by ~3% from flat sales volume in Q2; EBIDTA margins would remain flat on YoY basis to 23%.

Liquor companies
Q3 is seasonally strong quarter for the liquor companies. Radico Khaitan (RKL’s) and Allied Blenders Distillers (ABDL)’s revenues are expected to grow by ~21% and ~14% respectively. Prestige and Above (P&A) brands volumes are expected to grow in high teens during the quarter. EBIDTA margins of both the companies are expected to improve by 60-100bps on YoY basis.
View: Amongst the FMCG companies we continue to prefer companies have better near term earning visibility and relatively better valuations. In this context we continue to like Marico and Tata Consumer Products in the FMCG space. Recent correct in the broader indices provides good opportunity in the companies such as Radico Khaitan and Allied Blender & Distillers.

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere