Higher crude-linked input costs and weak volume growth may pressure FMCG margins despite expected revenue expansion this fiscal
India’s organised fast-moving consumer goods (FMCG) sector is likely to record revenue growth of 8–10 per cent in the current financial year as companies begin transferring part of the increase in crude-linked input costs, including packaging materials, to consumers, according to Crisil Ratings.
The projected growth is marginally higher than the nearly 8 per cent growth estimated for FY26.
The ratings agency said realisations are expected to rise sharply by 6–7 per cent as companies partially pass on higher raw material costs. However, volume growth is likely to slow to 2–3 per cent this fiscal because of inflationary pressures affecting consumer spending. In FY26, organised FMCG companies had posted volume growth of around 5–6 per cent.
Crisil Ratings added that the earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of its rated FMCG players is expected to contract by 150–200 basis points this fiscal from nearly 19 per cent in FY26.
The assessment is based on an analysis of 74 FMCG companies, which together account for nearly one-third of the sector’s estimated Rs 6.6 lakh crore revenue in FY26.
“Household budgets, both rural and urban, will face inflationary headwinds this fiscal as average crude oil prices for this fiscal are projected at 30–35 per cent, 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. 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,” Anuj Sethi, Senior Director, Crisil Ratings.
However, Sethi noted that GST rationalisation measures introduced in September 2025 and higher allocations towards welfare schemes are expected to provide some support to demand.
The report said cost pressures remain uneven across categories, with personal care and home care products such as soaps, detergents, shampoos and hair oils witnessing sharper input cost increases than food and beverage products.
Aditya Jhaver, Director, Crisil Ratings, said, “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 per cent.”
