FMCG Margins Stalled Amidst Revenue Growth: An Analysis

A recent report by Systematix Group reveals that FMCG companies, despite clocking a 9% year-on-year revenue growth in the third quarter of FY26, face constrained margin expansion. The revenue boost was largely attributed to GST-related adjustments and price corrections in some categories.

The report highlighted an uptick in sales volumes by 6% YoY driven by GST cuts in products like biscuits, noodles, and snack foods. However, this growth was augmented by restocking activities following a GST-induced trade disruption in prior months, suggesting that the increase may not be sustainable.

Sectors including tea and edible oils saw revenue contractions due to price corrections limiting realisations. Competition further intensified in categories such as detergents and paints, restricting price hikes. The report suggests consumer staples' ex-GST growth will be crucial for future profitability.