Rising costs, muted demand to weigh on FMCG margins in Q1
Live Events
(You can now subscribe to our
(You can now subscribe to our ETMarkets WhatsApp channel
ET Intelligence Group: Select companies in the fast moving consumer goods (FMCG) sector are expected to show marginal pickup in sales volume for the June quarter. Revenue growth will likely be driven by higher prices for some firms while others may report pressure due to weak demand. Margins may contract due to higher material costs and increased advertising spend for some companies. Marico and Tata Consumer Products are top picks of most analysts.The sector major, Hindustan Unilever 's volume growth is expected to revive to 3% for the June 2025 quarter given gradual recovery in demand. After clocking a 4% improvement in the year-ago quarter, volume growth fell in each of the following quarters to 2% in the March 2025 quarter. Operating profit may remain flat while margins are likely to contract by 1% due to rise in advertising and promotion costs to boost volumes.The cigarettes-to-paperboards maker, ITC is expected to sustain the year-on-year cigarette volume growth at the March quarter level of 5%. Paperboard growth is expected to remain weak due to sluggish export markets, weaker realisations and cheap Chinese supplies. Margins are expected to decline in both the categories due to surge in raw material costs. On the other hand, agri-business growth is expected to be in double-digit at around 10%. Nestle India is likely to deliver a 6% year-on-year growth in revenue, supported by about 6.5-7% rise in sales volume and price increase. However, inflation in coffee, cocoa, milk and edible oils could add pressure on the margin front. Varun Beverages (VBL), a major bottler of PepsiCo, may report flat revenue due to decline in volumes amid early onset of the monsoon season. According to Motilal Oswal Financial Services (MOFSL), the operating margin before depreciation and amortisation (Ebitda margin) may contract by 150 basis points. Britannia Industries is likely to clock volume growth of 3-4% while price increase implemented in the June 2025 quarter may drive revenue up by 9%. High agricultural commodity costs are likely to weigh on margins, though profit may rise by around 9% due to higher product prices.Revenue of Tata Consumer Products is expected to rise 11%, supported by growth in the domestic tea business. Salt segment is also expected to be driven by higher volumes and price increase. Marico's revenue may jump around 22% driven by 8-9% volume growth in the domestic market and higher product prices. On the contrary, margins are expected to contract by 330 bps points due to copra inflation and higher base.FMCG stocks outperformed the frontline indices in the past month where the Nifty FMCG index jumped 3.6% compared with around 1% rise in the benchmark Nifty 50 and BSE Sensex indices.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
First Post
21 minutes ago
- First Post
China's rare earths game: Record exports to US, still a squeeze for India
A dysprosium shortage tied to China's rare earth export controls has slowed AirPods production at Foxconn's Telangana plant, as India faces supply hurdles even as Chinese magnet exports to the US surge. read more Production of Apple AirPods at Foxconn's Telangana facility has reportedly been affected due to a shortage of dysprosium, following China's recent restrictions on rare earth exports, according to people familiar with the matter. The Foxconn Interconnect Technology (FIT) plant, located in Kongara Kalan, about 45 km from Hyderabad, is part of Hon Hai Technology Group (Foxconn), a Taiwanese multinational electronics contract manufacturer, is a key supplier for Apple. FIT is listed on the Hong Kong Stock Exchange. STORY CONTINUES BELOW THIS AD Foxconn said there is no disruption to production. The company began manufacturing AirPods at the India facility in April last year, as part of Apple's broader strategy to diversify production beyond China. AirPods include rare earth metals such as neodymium and dysprosium. Neodymium is mined in China and other countries. A source cited said that Foxconn had alerted the Telangana government about the supply issue. The state government subsequently approached the Department for Promotion of Industry and Internal Trade (DPIIT). 'Foxconn has sought the state government's help to get the end user certificate (EUC) certified and attested by central ministries,' the person said. The EUC is a formal document verifying the recipient and intended use of certain goods, particularly those with sensitive applications. 'Foxconn got the end user certificate from the ministry of external affairs and the Chinese embassy, as part of the process,' said another person. 'After that, Foxconn's supplier submitted it for approval (of dysprosium exports) to the Chinese government. But it is still pending, and the (Chinese) government has not given approval yet. Once that is done, the supplier will export the rare earth metal.' Apple did not respond to queries, while Foxconn said it 'has no comment on the issue,' reiterating, 'There is no disruption to production.' In India, Apple works with key suppliers including Foxconn and Tata Electronics. Globally, Foxconn is Apple's largest contract manufacturer. 'There was indeed some slowdown in production at the Foxconn AirPods plant, but it seems to have improved now,' said another industry executive. 'The supply chain for the metal is a bit longer, but the company is managing the situation now.' STORY CONTINUES BELOW THIS AD 'The Foxconn logistics team is expecting approval by the end of this month,' said the second person quoted earlier. 'The stipulated time frame from the date of application for approval is 45-50 days. Foxconn is working with whatever rare earth metals and dysprosium are already available with them to extend the product cycle before they get the additional material.' Industry flags cost, delays The India Cellular and Electronics Association (ICEA) informed the Indian government that the export curbs were causing delays and increasing costs, as reported by Economic Times on July 18. Apple and Foxconn are members of the ICEA. Earlier this month, reports suggested that Foxconn had repatriated over 300 Chinese engineers from its Indian iPhone production sites, reportedly under instructions from Beijing. While experts said these roles could be filled by Taiwanese engineers, they noted that replacing Chinese-sourced machinery and materials would be more difficult and could strain operations. Rare-earth magnet exports to US surge STORY CONTINUES BELOW THIS AD On July 18, China issued its first rare earth mining and smelting quotas of the year, according to Reuters. These quotas are seen as an indicator of global rare earth supply. China remains the world's largest producer of the 17-element group, which is crucial for electric vehicles, wind turbines, robotics, and defense systems. Despite its export restrictions on certain rare earth categories, China's exports of rare-earth magnets to the United States rose to 353 metric tons in June, up 660% from May, reflecting shifting trade dynamics and strategic prioritisation. China plays hardball with metals In early April, China placed seven categories of medium and heavy rare earths, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium-related items, under export control. The move followed US President Donald Trump's tariff announcements, and analysts saw it as Beijing's use of rare earth dominance as leverage in trade talks. In addition to electronics, dysprosium is used in laser targeting systems, military communication technologies, and in improving the temperature resistance of neodymium magnets. These properties make it essential for maintaining the performance of critical equipment in extreme environments. STORY CONTINUES BELOW THIS AD
Time of India
21 minutes ago
- Time of India
Stellantis to debut Leapmotor's EVs in South Africa this year
Stellantis plans to sell Chinese-branded electric vehicles developed by its partner Leapmotor in South Africa starting with the C10 from September, the company said on Tuesday. The C10 is an electric SUV with a petrol engine used purely to charge the battery. More Leapmotor models are expected to be launched next year, including fully electric models, Mike Whitfield, managing director of Stellantis South Africa and Sub-Saharan Africa, said in a statement. Leapmotor created waves with its recent rollout of the all-electric B10 SUV equipped with smart-driving features and lidar sensing technology for less than $18,000. In 2023, Stellantis bought a 21% stake in Leapmotor for $1.6 billion. The two automakers also formed the joint venture Leapmotor International, in which Stellantis holds a 51% stake. Leapmotor will help the world's fourth-largest automaker widen its range of affordable EVs, as it presses ahead with electrification at a time when other Chinese automakers including BYD and Chery Auto are aggressively expanding into Africa. "South Africa is a critical market for Stellantis, and we are fully committed to unlocking its potential through product, innovation and meaningful partnerships," Whitfield said. Stellantis, which entered the South African market four years ago, is building a new plant in the country, with a maximum capacity of 100,000 vehicles by 2030. It plans to become the No.1 player in the Middle East and Africa region with one million vehicles sold by 2030, with 35% expected to be electric. In 2024, it sold 500,000 cars in the Middle East and Africa. With over 60% of the South African market concentrated below the 400,000 rand ($22,755) price point, Stellantis' Citroën C3 range is gaining strong traction, with the upcoming C3 Basalt set to complete a competitive lineup in the accessible B-hatch and SUV segments early next year, Whitfield said. Stellantis will also launch the Citroën C3 Hola panel van, its entry into the growing commercial vehicle sector aimed at small business owners.>
Business Standard
26 minutes ago
- Business Standard
Quick Wrap: Nifty Media Index registers a drop of 2.27%
Nifty Media index closed down 2.27% at 1733.6 today. The index has added 4.00% over last one month. Among the constituents, Zee Entertainment Enterprises Ltd fell 5.68%, Dish TV India Ltd dropped 2.05% and Network 18 Media & Investments Ltd shed 1.44%. The Nifty Media index has decreased 11.00% over last one year compared to the 2.25% spike in benchmark Nifty 50 index. In other indices, Nifty PSU Bank index has slid 1.57% and Nifty Realty index has dropped 1.01% on the day. In broad markets, the Nifty 50 has slid 0.12% to close at 25060.9 while the SENSEX has declined 0.02% to close at 82186.81 today.
