India’s consumer staples sector is expected to sustain double-digit revenue growth in the near term, supported by improving volumes and pricing, but higher input costs are likely to keep margins under pressure, Systematic Research said in its latest report.
The brokerage expects aggregate revenue growth of around 13 per cent year-on-year for the top 10 companies in its coverage, with volumes rising about 8 per cent. It said volume growth has improved meaningfully over the past four quarters to 7-9 per cent, compared with 2-5 per cent in the preceding 14 quarters.
“Demand trends encouraging; margin pressure to land,” the report said, attributing the improvement in topline growth partly to higher product grammages following GST rate cuts across categories such as noodles, dairy, snack foods, hair oils, chocolates and coffee.
The sector’s revenue growth is also being supported by 5-6 per cent price increases in categories including soaps, detergents, edible oils, oral care, snack foods and dairy, which companies have taken to partly offset higher input costs.
Systematic further expects double-digit revenue growth to continue in the near term, with pricing making a significant contribution. - ANI
