The July-September 2025 quarter of the financial year 2025-26 (FY26) for the fast-moving consumer goods (FMCG) sector is expected to show mixed performance as companies deal with weather disruptions and the impact of the goods and services tax (GST) rate cuts. Analysts described it as “a quarter in transition,” with varied results across major consumer names.
The first half of the quarter was affected by heavier-than-expected rainfall and flooding in some parts of the country, which led to temporary weakness in demand. The GST rate cuts, effective from September 22, also triggered some destocking as companies adjusted inventories.
The good part is that tier-two and rural growth have outpaced urban, and the next quarter’s demand commentary and raw material stability will be key indicators to watch.
This quarter also marks a change in leadership for top FMCG firms – Hindustan Unilever (HUL) will report its first results under Priya Nair, and Nestle India under Manish Tiwari. Consolidated growth for HUL is expected to be flat to low single digits, while Godrej Consumer is likely to report mid-single-digit revenue growth with lower margins due to the GST transition. Marico’s international business continues to grow in double digits, though overall growth is expected to moderate.
Retailers have benefited from the early festive season, with V-Mart reporting an 11% same-store sales growth and V2 Retail up 23%. Jewellery companies have also performed strongly, supported by higher gold prices – Titan reported a 19% rise in domestic jewellery sales, while Kalyan Jewellers saw 31% growth.
Analysts expect mixed results across the sector. Asian Paints is likely to see a 2-3% revenue decline with earnings before interest, taxes, depreciation, and amortisation (EBITDA) growth of about 8–10%, while Tata Consumer may post 15–17% topline growth with a slight margin decline. Britannia is expected to feel the sharpest GST-related impact, while Colgate could be among the weaker performers this quarter.
Executive Director at Nuvama Institutional Equities, said that quarter two results would show short-term disruptions but added that “good news will come back in quarter three.” He expects food companies to lead the recovery. “Our top picks will be Bikaji Foods, Britannia Industries, Nestle India, and Hindustan Unilever. We also like Asian Paints, Pidilite, and United Spirits,” he said.
He explained that GST 2.0 will benefit food companies the most. “The real consumption boost will be there in smaller packs like ₹5 or ₹10 biscuits or snacks,” he said. However, he was cautious on Colgate, citing risks from the inverted duty structure and limited GST benefit. He expects Britannia, Bikaji, and Nestle to see volume and margin gains in the second half as restocking begins.
On the alcohol segment, he noted that United Spirits has seen strong demand from Andhra Pradesh and Karnataka, while United Breweries may recover later in the year. “Beer is starting to see the benefit – it has not come in quarter two, it will come in quarter three and quarter four,” he said.
While FMCG valuations remain high, analysts pointed out that current levels are lower than the five-year average.