India Consumer Staples - Silver Lining For Recovery In Rural Markets: Dolat Capital

Dolat Capital Report

The rural markets in India are showing early signs of recovery. Macro indicators like unemployment rate, tractor sales and rabi sowing are pointing towards recovery.

As per data provided by CMIE the unemployment rate in rural has declined to 7.6% in Nov-22 compared to 8.0% in Oct-22. Domestic tractor sales for Nov-22 indicates increase of 6.5% YoY, the sales of largest manufacturer Mahindra and Mahindra Ltd. has grown by 11.8%. In Nov-22 the sowing of crops has seen sharp increase of 24%, the area under pulses increased by 42% to 20.6 lakh hectares similarly oilseeds sowing increased by 29%.

Sales growth for fast moving consumer goods companies in H1 FY23 was muted primarily due to slower growth in rural areas.

Slowdown in rural areas can be attributed to inflationary pressures and comparatively lower growth in earnings. However, early indicators of improvement in rural growth would help accelerate volume performance in the ensuing quarters.

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