Consumer Staple Margins To Improve In Q4 FY26 On GST Cuts: Report

(MENAFN- AsiaNet News)

Margin Recovery Expected in Q4 FY26

The margins of consumer staple companies are expected to improve in the fourth quarter of FY26 (January-March) as lower consumer prices following GST cuts support recovery, according to a report by Systematix Research. The report highlighted that lower consumer prices following GST cuts and easing input costs also due to low inflation are likely to support margin recovery in the quarter. "We expect margins to improve materially in 4Q26 as costs continue to ease, we expect gradual QoQ improvement in volume demand on (1) easing consumer pricing (as input costs pull back)" the report stated.

The report expects this improvement is expected to be driven by two key factors, easing consumer pricing as raw material costs pull back, and ongoing expansion of distribution networks by most consumer staple companies.

Review of Q3 FY26 Performance

Before this expected recovery in the fourth quarter, consumer staple companies likely delivered revenue growth close to high-single digits in the third quarter of FY26. The report estimated revenue growth of around 6.7 per cent year-on-year in aggregate for companies under its coverage. This growth was supported by an improvement in volume growth, which rose to 3.5 per cent year-on-year in Q3FY26, compared to 3 per cent in Q2FY26 and 2 per cent in Q3FY25.

The report noted that volume growth had weakened in the second quarter of FY26 due to trade disruptions and destocking by dealers after GST cuts. While this weakness eased in the third quarter, some companies continued to face disruption during October and part of November, followed by gradual normalisation. This partly impacted overall growth in Q3FY26.

Product Category Performance

On the product side, categories such as biscuits, soaps, hair oils, noodles, coffee, chocolates and cakes performed well during the quarter. Winter-related products, including skincare items, dry fruits and honey, also saw good demand. However, categories such as tea, edible oils, milk and other dairy products, and juices were likely impacted during the same period.

Paints Segment Recovery

In the paints segment, the report expects a meaningful sequential pickup in volume growth to high single digits. This recovery was supported by the resumption of painting activity after the monsoon season, increased demand during the wedding season and the release of deferred demand.

Gradual Recovery and Favourable Outlook

Overall, the report suggested that with improving volumes and easing costs, consumer staple companies are entering a phase of gradual recovery, with margins starting to turn favourable in the final quarter of FY26. (ANI)

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)

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