A Crisil Ratings study of 74 fast moving consumer goods (FMCG) companies, accounting for a third of the sector’s estimated Rs 6.6 lakh crore revenue in fiscal 2026, shows that the sector is expected to post 8–10% revenue growth this fiscal, a tad higher than 8% witnessed in fiscal 2026.
The uptick in growth will be driven by a sharp 6–7% increase in realisations as players partially pass on the increase in prices of crude-linked inputs including packaging materials, emanating from the West Asia conflict. However, volume growth is likely to moderate to 2–3% this fiscal from 5–6% in fiscal 2026, as inflationary pressures weigh on both urban and rural demand. Moreover, rural demand is also susceptible to prospects of a below-normal monsoon.
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Consequently, the earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of our rated FMCG players is seen declining 150–200 basis points (bps) this fiscal from 19% in fiscal 2026. Nevertheless, low leverage and healthy liquidity position should keep credit profiles stable. By category, the food and beverages (F&B) segment generates nearly half of the sector’s revenue, with personal care (PC) and home care (HC) segments contributing a quarter each. Urban markets account for ~60% of revenue, with rural markets making up the rest.
Says Anuj Sethi, Senior Director, Crisil Ratings, “Household budgets, both rural and urban, will face inflationary headwinds1 this fiscal as average crude oil prices for this fiscal are projected at 30–35%2 higher on-year. As these price increases are passed on to the retail consumers, including through fuel price hikes, disposable incomes are likely to be hit.
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Furthermore, the rural market, which had outperformed the urban segment in the past two years, is expected to see a reversal of fortunes this fiscal, given the forecast of a below-normal monsoon. Nevertheless, continuing benefits of the goods and services tax rationalisation4 undertaken in September 2025, along with increased allocation to welfare schemes5, will provide some demand support for the sector.”
While the industry is facing significant cost pressures due to the rise in raw materials, it is not uniform across segments. For instance, PC and HC categories, such as soaps, detergents, hair oil, and shampoos, are facing a sharper increase in input prices, as crude-linked inputs account for 30–40% of the overall raw materials for these segments, compared with 15% for F&B.
Overall, the sharp rise in crude-linked input costs, including packaging, accounting for 25–30% of total raw material costs, will squeeze profitability of the companies.
Says Aditya Jhaver, Director, Crisil Ratings “Gross margins of organised FMCG players will decline 300–350 bps due to the rise in input costs, as pass-through of cost inflation will be partial amid competitive pressures and the risk of downtrading.
In the milieu, companies are calibrating their advertising spends, focusing on cost efficiencies and negotiating with suppliers and distributors across the value chain. This is expected to limit the impact on operating profitability to 150–200 basis points, keeping operating margins relatively healthy at 17 18%.”
The uptick in growth will be driven by a sharp 6–7% increase in realisations as players partially pass on the increase in prices of crude-linked inputs including packaging materials, emanating from the West Asia conflict. However, volume growth is likely to moderate to 2–3% this fiscal from 5–6% in fiscal 2026, as inflationary pressures weigh on both urban and rural demand. Moreover, rural demand is also susceptible to prospects of a below-normal monsoon.
Also Read | Emami's desi portfolio puts up a fight as summer sales melt amid West Asia tensions
Consequently, the earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of our rated FMCG players is seen declining 150–200 basis points (bps) this fiscal from 19% in fiscal 2026. Nevertheless, low leverage and healthy liquidity position should keep credit profiles stable. By category, the food and beverages (F&B) segment generates nearly half of the sector’s revenue, with personal care (PC) and home care (HC) segments contributing a quarter each. Urban markets account for ~60% of revenue, with rural markets making up the rest.
Says Anuj Sethi, Senior Director, Crisil Ratings, “Household budgets, both rural and urban, will face inflationary headwinds1 this fiscal as average crude oil prices for this fiscal are projected at 30–35%2 higher on-year. As these price increases are passed on to the retail consumers, including through fuel price hikes, disposable incomes are likely to be hit.
Also Read | Fewer top-ups mark FMCG buying shift
Furthermore, the rural market, which had outperformed the urban segment in the past two years, is expected to see a reversal of fortunes this fiscal, given the forecast of a below-normal monsoon. Nevertheless, continuing benefits of the goods and services tax rationalisation4 undertaken in September 2025, along with increased allocation to welfare schemes5, will provide some demand support for the sector.”
While the industry is facing significant cost pressures due to the rise in raw materials, it is not uniform across segments. For instance, PC and HC categories, such as soaps, detergents, hair oil, and shampoos, are facing a sharper increase in input prices, as crude-linked inputs account for 30–40% of the overall raw materials for these segments, compared with 15% for F&B.
Overall, the sharp rise in crude-linked input costs, including packaging, accounting for 25–30% of total raw material costs, will squeeze profitability of the companies.
Says Aditya Jhaver, Director, Crisil Ratings “Gross margins of organised FMCG players will decline 300–350 bps due to the rise in input costs, as pass-through of cost inflation will be partial amid competitive pressures and the risk of downtrading.
In the milieu, companies are calibrating their advertising spends, focusing on cost efficiencies and negotiating with suppliers and distributors across the value chain. This is expected to limit the impact on operating profitability to 150–200 basis points, keeping operating margins relatively healthy at 17 18%.”
