Consumer Sector Q3 Results Preview

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The fast moving consumer goods industry has seen volume declines for four consecutive quarters till Q2 FY23, owing to double-digit price hikes over the last six quarters. Q3 FY23E has seen similar market conditions.

The quarter is expected to see continued declining/ flat volumes, growth led by pricing, a higher impact on rural demand, and weakness in bottom-of-the-pyramid products and price points. While demand surged during the festive period, there was demand softness in the following months.

As per Reserve Bank of India’s monthly bulletins, fmcg sales increased by 12.0% YoY in September 2022 aided by the onset of the festive season.

However, the fmcg sales declined by 0.5% / 2.7% YoY in October/ November 2022, respectively. As the inflation continues to decline, there should be some revival in the overall demand trends.

The macro challenges continued in Q3 FY23, leading to the continuance of muted rural demand. Factors such as easing inflation, farmers getting money in their hands post the harvest season and continued Government spending is expected to contribute to an improvement in demand.

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