New Delhi [India], July 4 : The fast-moving consumer goods (FMCG) sector will see a revenue growth of 7-9 per cent in the current fiscal, says rating agency CRISIL in its report. The growth in the sector will be fuelled by higher volume, revival in rural demand and steady urban demand.
The report added that the product realisations are expected to grow modestly with slight increases in key raw material prices for the food and beverages (F&B) segment, while prices for personal care (PC) and home care (HC) segments will remain stable.
The rating agency further added that the Premiumisation and volume growth will expand operating margins by 50-75 basis points to 20-21 per cent, although rising marketing expenses due to intense competition will limit further expansion.
The product realisation combines market requirements, technological capabilities, and resources to define new product designs and the requisite manufacturing and field support processes.
The rating agency's studied 77 FMCG companies, representing about a third of the sector's Rs 5.6 lakh crore revenue last fiscal, highlights that the F&B segment accounts for nearly half the sector revenue, with Home and Personal Care segments, each accounting for a quarter.
Supported by better monsoon, rural consumer volume growth is expected at 6-7 per cent in fiscal 2025. Higher minimum support prices, and increased government spending on rural infrastructure will also add to rural growth.
Urban consumer volume growth is projected to remain steady at 7-8 per cent, driven by rising disposable incomes and a focus on premium products.
Expressing optimism on the overall outlook, the report added that the revenue will benefit from modest realisation growth of 1-2 per cent and a focus on enhancing premium offerings.
The F&B segment is expected to grow 8-9 per cent, the PC segment 6-7 per cent, and the HC segment 8-9 per cent saysAditya Jhaver, Director, CRISIL Ratings,"We expect volume growth of 6-7 per cent in fiscal 2025 from the rural consumers (40 per cent of overall revenue), supported by expectation of better monsoon benefitting agricultural production, and hike in minimum support price supporting farm incomes. Higher government spending on rural infrastructure, primarily through Pradhan Mantri Awaas Yojana-Grameen (PMAY-G) for affordable houses, will aid higher savings in rural India, supporting their ability to spend more."
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