Mihir Shah, VP, India Consumer-Equity Research Analyst at Nomura, expects FMCG companies to take price hikes to offset cost pressures, with earnings trends likely to depend on pricing power and cost management. Performance may vary across companies based on exposure to raw materials and the ability to pass on costs.

FMCG demand recovery picks up, but rising costs could weigh on margins

Mihir Shah, VP, India Consumer-Equity Research Analyst at Nomura, expects FMCG companies to take price hikes to offset cost pressures, with earnings trends likely to depend on pricing power and cost management. Performance may vary across companies based on exposure to raw materials and the ability to pass on costs.

FMCG demand picked up in the January-March 2026 quarter, helped by price corrections and a recovery in rural consumption. The gap between price and volume growth has also started narrowing

However, the focus now shifts to costs and supply. Input costs are rising, driven by higher crude-linked packaging expenses and LPG shortages. This is likely to start showing up in margins from the first quarter, with companies expected to take price hikes.

“Companies have already called out a 6% to 8% price increase… we are seeing about 10% price increase in certain portfolios,” said Mihir Shah, Vice President – Consumer Equity Research at Nomura.

Shah expects select companies to outperform. “We are expecting positive surprises to come from Godrej Consumer, Tata Consumer,” he said, adding that gains may also extend to other segments like jewellery.

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Within segments, paints are likely to see improvement in revenue growth, driven by pricing and a lower base. “Revenue growth momentum has also improved from mid single to double digit from the first quarter,” Shah said.

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While cost pressures could vary across companies depending on raw material exposure, firms with higher dependence on crude-linked inputs may see more margin pressure, while others could be relatively less impacted.

Tata Consumer, Dabur, Marico, and GCPL are likely to be least affected, while food companies may see a moderate impact.

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