FMCG industry witnessed some improvement in volume growth and continued gradual recovery in rural demand trends in the June quarter. Companies with summer-centric portfolios are likely to report stronger growth in volume in Q1 FY24 due to intense heatwave across the country. 

Overall analysts expect the key listed companies in the industry to broadly post low-to-mid single-digit volume growth in the June quarter.

Dabur India, in its quarterly update ahead of the release of Q1FY25 results, said that the June quarter saw sequential improvement in demand with rural growth picking up. It added that domestic business is expected to record “mid-single digit” volume growth.

Marico also noted in quarterly update that during the June quarter, its domestic business posted a modest uptick in underlying volume growth on a sequential basis.

In the March quarter, rural growth outpaced urban growth for the first time after growing at a slower pace in the past year.

As per data from Kantar, in the March quarter, rural volume growth was pegged at 5.8 per cent and urban volume growth at 4.7 per cent. Industry players expects rural growth to continue to outpace urban growth in June quarter too.

“Overall market volumes in Q4 grew at mid-single digit, with rural outpacing urban. We expect Q1 FY25 trend to be similar for sector. Volume growth is likely to be in low-to-mid-single-digit, largely due to heatwave, general elections and fewer marriage days. Rural demand continues to see gradual but slight green shoots. Sales of cold beverages and ice creams zoomed in the June quarter as consumers tried to escape from heatwave. Parts of personal care segment also thrived with talcum powder, deodorants and sunscreens experiencing good growth,” said a report by Nuvama Institutional Equities.

However, intense heatwave did impact out-of-home consumption, analysts noted.

A report by Motilal Oswal Financial Services stated that demand trends were seen to be steady in 1QFY25, with the summer portfolio likely to outperform. “We expect marginal improvements in volume growth q-o-q in 1QFY25.

Rural markets have seen a gradual recovery than urban during the quarter. Most company managements remain positive about volume recovery in FY25. All eyes are on the govt’s initiatives to boost rural income in the upcoming budget, the report added.

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