Consumer Goods Sector Analyzed

The companies that make things like food, cleaning supplies, and beauty products are likely to have a slow quarter in the next few months. However, things are starting to look up, and these companies could grow faster in the future. This is according to Emkay Global Financial Services, a company that researches stocks.

Key Points

• Food companies expected to grow 6% – quicker than others.
• Home & Personal care face challenges from new taxes.
• Marico expected to grow 28%, leading the pack.
• ITC cigarette sales will rise by 5% this quarter.
• Raw material costs dropping, easing pressure on profits.
• Growth depends on companies doing a good job – “execution”.

What’s Happening Now?

In the next few months (Q3FY26), most consumer goods companies aren’t expected to grow very quickly. This means their sales might only increase by about 6% compared to the time before. But, there are good signs that things will get better over the next few quarters.

Food vs. Home & Personal Care

Food companies are doing better than the others. This is because stores are quickly selling the food they have, and shops are buying more food to sell. Home and personal care products are having trouble because of new taxes (called GST) that were introduced in October. This slowed down sales and didn’t allow shops to stock up as much.

Which Companies Are Doing Well?

Some companies, like Marico, are expected to grow by a lot – 28%. Others, like Britannia, Nestle India, and Bikaji Foods, will likely grow by around 10%. ITC, which sells cigarettes, is expected to increase sales by 5%.

The Holidays Help

The holidays started early in the fall, which helped food companies sell more. However, home and personal care products didn’t do as well because people were waiting to buy them until later. It’s like waiting for the weather to get colder before buying winter clothes.

Are Taxes Going to Change?

Many companies think the new taxes will eventually get better, but it might take a while – possibly 12 to 15 months. Some believe they’ll see improvements in the next quarter (Q4), while others think it will take longer.

Lower Costs for Companies

The cost of materials for making these products is going down. Things like coconut oil (copra), palm oil, wheat, and tea are all cheaper than they were before. Also, the cost of fuel is decreasing, which will help companies save money.

Growth Needs to Speed Up

Even though things are improving, Emkay says big consumer goods companies aren’t growing as fast as they could because they aren’t coming up with new products quickly enough, or they aren’t doing a good job of selling those products. To get things moving, these companies need to grow faster.

Favorite Companies

Emkay likes companies like Godrej Consumer Products, Marico, Bikaji Foods, and Emami. They’ve slightly lowered their expected prices for Hindustan Unilever Limited (HUL) and Bikaji Foods because of this. They believe these companies are best positioned to benefit from the upcoming growth.

The success of these companies will depend on their ability to quickly adapt to changing consumer tastes and efficiently execute their growth strategies.