Rising commodity costs threaten FMCG profit margins despite strong sales in India Q2

Indian fast-moving consumer goods companies are confronting heightened cost pressures in the September quarter as crude oil, related packaging derivatives and other key commodities have surged, compounded by deficit rainfall. Brokerage reports indicate that while most leading FMCG players will still post double-digit revenue growth, their EBITDA margins are likely to fall short of sales expansion because of inflationary inputs.

Dabur India reported that inflation hit its home-care and OTC segments, offset partly by modest price increases and efficiency drives. Marico expects stronger margins thanks to a favorable product mix and lower copra prices, whereas Godrej Consumer Products noted renewed raw-material inflation but remains confident of a solid quarter. Analysts stress that the ability to pass higher costs to consumers, especially during the festive season, will be crucial for maintaining profitability.