The fast-moving consumer goods (FMCG) sector is expected to see revenue grow 7-9% in FY25, riding on higher volume growth, supported by an expected revival in rural demand and steady urban demand, CRISIL Ratings said in a report. This follows an estimated 5-7% growth in FY24.
“Product realisations are expected to grow in low single digits with marginal rise in prices of key raw materials for the food and beverages (F&B) segment. That said, key raw material prices for personal care (PC) and home care (HC) segments are seen to be stable,” the rating agency said.
“Increasing premiumisation and growth in volume will expand operating margin by 50-75 basis points to 20-21%. The margin expansion would have been higher but for rising selling and marketing expenses amid heightened competition among organised and unorganised players alike,” it added.
Aditya Jhaver, Director, CRISIL Ratings said, “We expect volume growth of 6-7% in FY25 from the rural consumers (40% 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,” he added.
On the other hand, volume growth from urban consumers will remain steady at 7-8% during fiscal 2025 supported by rising disposable incomes and continued focus on premium offerings by the players, especially in the personal care and home care segments, the rating agency said.
Rabindra Verma, Associate Director, CRISIL Ratings said, “Revenue growth will vary across product segments and firms. The F&B segment is expected to grow 8-9% this fiscal, aided by improving rural demand, while the personal care segment will grow 6-7%.” ”The home care segment, which outpaced the other two segments last fiscal, is expected to grow 8-9% this fiscal, led by continued premiumisation push and steady urban demand,” he added.
