India’s fast-moving consumer goods (FMCG) sector is set to experience robust growth in the fiscal year 2024, according to a recent report by rating agency CRISIL. The agency projects a revenue growth of 7-9% for the sector, driven by higher volumes, a revival in rural demand, and steady urban consumption.

CRISIL’s study, which analyzed 77 FMCG companies representing about a third of the sector’s Rs 5.6 lakh crore revenue last fiscal, reveals that premiumisation and volume growth will expand operating margins by 50-75 basis points to 20-21%. However, intense competition leading to higher marketing expenses may limit further margin expansion.

The report paints an optimistic picture for rural consumer growth, projecting a 6-7% increase in fiscal 2025. This growth is expected to be bolstered by expectations of a better monsoon, higher minimum support prices, and increased government spending on rural infrastructure. Urban consumer volume growth is anticipated to remain steady at 7-8%, driven by rising disposable incomes and a growing preference for premium products.

Aditya Jhaver, Director at CRISIL Ratings said, “We expect volume growth of 6-7% in fiscal 2025 from rural consumers, supported by expectation of better monsoon benefitting agricultural production, and hike in minimum support price supporting farm incomes.”

Jhaver also highlighted the importance of government initiatives like the Pradhan Mantri Awaas Yojana-Grameen in supporting rural growth, noting that these programs will contribute to higher savings in rural India and support increased spending capacity.

Segment-wise, the food and beverages segment is expected to grow 8-9%, personal care 6-7%, and home care 8-9%. The agency notes that product realisations are expected to grow modestly, with slight increases in key raw material prices for the food and beverages segment, while prices for personal care and home care segments will remain stable.

(Inputs from ANI)