Revenue growth of FMCG cos may double

Crisil Ratings expects revenue growth of the fast-moving consumer goods (FMCG) sector to double to 10-12% year-on-year in the current fiscal, the highest in past three fiscals. This will be on account of price hikes being affected across product categories to offset the impact of the raw material price increase and a few other favourable factors.

The agency added that operating margins will be restored to the normal level of 19 to 20% with a moderation of 80 to 100 basis points (bps) this fiscal because of an increase in advertising expense and rise in raw material prices. Last year, however, operating margins had improved by 100 bps last fiscal inspite of lower revenue growth due to reduction in advertising and promotional expenses.

“Widespread Covid-19 afflictions in the hinterland during the second wave will result in moderation in rural growth this fiscal. However, recovery in urban demand for FMCG products will offset this and outpace rural revenue growth,” Anuj Sethi, Senior Director of Crisil Ratings said.