|
Consumer staple companies are expected to witness a gradual improvement in demand from the fourth quarter of FY26, supported by stabilising trade conditions after the GST reduction and multiple measures taken by the government, highlighted a report by Motilal Oswal.
The report noted that with trade gradually stabilising following the GST reduction, demand for staple products is likely to pick up steadily in the coming months. This recovery is expected to be driven by resilient rural demand and improving sentiment in urban markets. It stated "Multiple measures have been initiated by the govt., and we expect steady improvement in demand from 4QFY26 onward". According to the report, several government initiatives have been rolled out, which are expected to aid consumption, leading to a steady improvement in demand from 4QFY26 onwards. Motilal Oswal said that staple companies are likely to report a sequential improvement in revenue growth as trade disruptions ease. The report pointed out that after the implementation of GST 2.0, disruptions continued through October and partially into November, impacting business activity for nearly 40-45 days. During this period, trade adjustments and operational challenges weighed on demand and supply chains. However, the situation began to improve thereafter, with partial restocking helping support primary growth. The report highlighted that companies undertook grammage additions in low-unit price packs to pass on the benefits of GST rate reductions to consumers. These measures are expected to support volume growth, especially in the packaged foods segment, as consumers receive better value without a direct increase in prices. The report also noted that a favourable winter season is expected to further boost consumption across several categories. Products such as health supplements, personal care items, hot beverages, and other winter-sensitive goods are likely to see stronger off-take during this period. From the fourth quarter onwards, growth is expected to better reflect underlying demand conditions as trade disruptions fully normalise. Motilal Oswal said that rural demand is expected to remain resilient, supported by ongoing recovery trends, while urban demand has also shown signs of improvement. The combination of stabilised trade, supportive government measures, seasonal demand, and pricing actions by companies is likely to provide a sustained push to consumption. Overall, the report expects consumer staple companies to enter a phase of gradual but steady demand recovery from 4QFY26. (ANI)
|
