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We believe that stocks of fast moving consumer goods companies are poised to rise in the next few weeks as most companies in the sector have begun hiking prices of products to compensate for higher input costs. FMCG companies have initiated price increases to pass on the rise in input costs from the currency depreciation. We expect volume growth to remain stable and hence revenue growth to pick up. On volume growth, we see no slowdown at the aggregate level, with many companies seeing an acceleration in 2Q over 1Q volume growth. Cigarettes was the only weak spot, as the price elasticity of cigarettes impacted volumes.
We believe that with increasing focus on improving rural distribution, FMCG players will be able to post double-digit growth in sales for the next two years. There may be some glitches in the near term due to regional Disturbances (such as the Telangana issue), but overall with strong demand from rural areas, most players will grow 10-15% in the second half of this financial.
We believe that stocks of fast moving consumer goods companies are poised to rise in the next few weeks as most companies in the sector have begun hiking prices of products to compensate for higher input costs. FMCG companies have initiated price increases to pass on the rise in input costs from the currency depreciation. We expect volume growth to remain stable and hence revenue growth to pick up. On volume growth, we see no slowdown at the aggregate level, with many companies seeing an acceleration in 2Q over 1Q volume growth. Cigarettes was the only weak spot, as the price elasticity of cigarettes impacted volumes.
We believe that with increasing focus on improving rural distribution, FMCG players will be able to post double-digit growth in sales for the next two years. There may be some glitches in the near term due to regional Disturbances (such as the Telangana issue), but overall with strong demand from rural areas, most players will grow 10-15% in the second half of this financial.
