Consumer Sector Q3 Preview - Challenges Persist Due To Raw Material Inflation, Subdued Demand: DRChoksey

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DRChoksey Research Report

Consumption trends in Q3 FY25 were mixed, with staple companies expected to report a muted quarter due to sluggish urban demand, weak winter portfolio sales, and the impact of high palm oil prices on the personal-wash segment. YoY volume growth is expected to decline, while pricing pressures ease, leading to positive pricing for most companies.

The FMCG sector remains subdued due to macroeconomic challenges, inventory corrections, adverse weather, liquidity constraints, rising food inflation, and shifts toward quick commerce.

We expect food and beverage companies to raise prices to offset rising agricultural commodity costs, aiming to preserve margins.

In the paint industry, demand remains weak, leading to further deceleration in Q3 FY25E. Margins are likely to decline YoY due to negative operating leverage and increased investments amid heightened competition, but remain stable QoQ.

We forecast Asian Paints to report a 2.0% YoY revenue decline driven by subdued demand.

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