FMCG stocks rally on urban demand recovery; BSE FMCG index gains in weak market

Shares of leading fast-moving consumer goods (FMCG) companies in India saw strong buying interest on Monday, with the BSE FMCG index rising 1.1 per cent, outperforming the broader market, which remained largely subdued. The rally was driven by a sequential uptick in urban demand, recovery in volumes, and improved growth guidance from key players in the sector.

By 11:46 AM, the BSE FMCG index was the top-performing sectoral index, up 1.48 per cent, while the BSE Sensex slipped 0.031 per cent, reflecting weak sentiment in other segments.

In intra-day trade, shares of Bajaj Consumer Care, Godrej Consumer Products, Dabur India, Jyothy Labs, and Hindustan Unilever (HUL) gained between 2 per cent and 8 per cent. Meanwhile, Colgate-Palmolive, Emami, Marico, Britannia Industries, and ITC also advanced around 1 per cent each, buoyed by expectations of steady consumer demand and pricing-led revenue growth.

Godrej Consumer Products Maintains FY26 Growth Guidance

Godrej Consumer Products was among the top gainers, as the company reaffirmed its outlook for high single-digit revenue growth and double-digit EBITDA growth in FY26. It also expects mid-to-high single-digit volume growth on a standalone basis, supported by margin expansion in the second half of the fiscal year.

Brokerage firm ICICI Securities stated that soap sales volumes are likely to improve in the second half of FY26 as the base effect normalises. The India business is showing signs of recovery, and the Africa segment is performing well following recent restructuring. However, the company will need to revamp its Indonesia strategy to sustain overall growth momentum.

Dabur Faces Near-Term Drag, Long-Term Prospects Steady

While Dabur India gained in early trade, analysts flagged concerns over its domestic beverages business, which is expected to weigh on Q1FY26 earnings. However, a combination of improving rural demand and a rebound in urban consumption supports the medium- to long-term outlook. Rising competition in categories such as oral care, beverages, and home care, however, may limit profitability in the near term.

FMCG Sector Outlook: Pricing Push to Drive Growth Amid Margin Pressures

In its Q1FY26 FMCG sector preview, Elara Capital noted that demand held steady during the quarter, though weak summer conditions and an early monsoon negatively impacted seasonal categories such as beverages and cooling products. Companies with strong presence in essentials like tea, salt, oils, and biscuits are expected to post solid pricing-led revenue growth, though margin pressures are likely to persist due to higher input costs.

Marico, Tata Consumer Products, Mrs. Bectors Food, and Britannia are expected to report double-digit revenue growth, driven by price hikes in key categories. Marico and Britannia may also lead in volume growth, while Colgate, Emami, Dabur, and Varun Beverages are expected to see flat or declining volumes due to seasonal weakness and increased competition—particularly in the toothpaste segment.

Even with near-term margin challenges, analysts believe the FMCG sector in India is well-positioned for gradual recovery in FY26, especially if rural demand picks up and urban consumption trends continue to strengthen.