Summary:
FMCG companies reported sales momentum in Q2FY27, supported by demand and pricing actions. However, rising raw material and packaging costs continued to pressure profitability. A broader 773-company corporate sample recorded 25.1% sales growth, while operating margins improved 17.5 basis points.
India’s fast-moving consumer goods (FMCG) sector reported strong sales growth in Q2FY27 on the back of improving demand, higher volumes and selective price hikes. But rising raw material costs continued to pressure operating margins, leaving companies with the challenge of guarding profitability even as revenues grew strongly.
FMCG Sales Growth Picks Up Pace in Q2FY27
The September quarter saw a strong pick-up in sales momentum for Indian companies. An analysis of 773 companies across sectors excluding banks, financial services, insurance and oil & gas showed that net sales growth accelerated to 25.1% YoY in Q2FY27 from 22.5% in Q1FY27.
The improvement was seen in consumer-facing businesses where stronger festive demand, distribution expansion and higher product prices helped revenue.
But sales growth didn’t translate into equally strong operating performance. Companies paid more for raw materials, packaging and transportation.
The wider corporate earnings trend highlights the impact of rising costs on profitability, even as demand remains strong.
Operating margins are under pressure from higher input costs.
Operating profit margins have been squeezed for much of the year.
Q2FY27: Operating margins improved by 17.5 basis points for the broader corporate sample after contracting in the previous three quarters.
| Quarter | Change in Operating Margin |
| Q3FY26 | -139.2 bps |
| Q4FY26 | -56.3 bps |
| Q1FY27 | -61.9 bps |
| Q2FY27 | +17.5 bps |
Even with the small improvement, raw material costs remained high. The raw material expenses to sales ratio was 335.6 bps higher than its year-ago level in Q2FY27.
Higher crude oil prices, edible oils, sugar and packaging costs continued to impact FMCG manufacturers. Imported material also became more expensive due to a weaker rupee.
Some companies have hiked prices on products to preserve margins. Others took some of the hit to maintain market share and consumer demand.
Q2 Results: Mixed Bag for Big FMCG Firms
Hindustan Unilever (NSE: HINDUNILVR) reported a 15% YoY revenue growth at ₹18,071 crore in Q2FY27. Standalone net profit, however, grew a modest 4% to ₹2,790 crore.
Its EBITDA margin slipped 140 basis points to 22.6% and underlying volume growth was 7%.
Tata Consumer Products (NSE: TATACONSUM) registered a 14% revenue growth at ₹5,661 crore. Consolidated EBITDA was up 18% at ₹794 crore and group net profit was up 16% at ₹470 crore.
Nestlé India (NSE: NESTLEIND) posted a 20.5% rise in sales to ₹6,782.2 crore, aided by higher volumes across product categories. Profit after tax shot up 36.3% to ₹1,026.8 crore.
The results show that profitability varied widely across companies, depending on variables like the mix of products, pricing decisions, and how well costs are controlled.
Why FMCG Stocks Are Under Pressure
Despite better sales, FMCG stocks have had a torrid time in 2026
The Nifty FMCG index closed at 43,609.20, down 0.62% in the session on October 30. The trading activity amounted to about 5.95 crore constituent shares.
The index fell 2.02% in October and was down 18.82% so far this year, amid concerns over earnings growth and sticky inflation.
Hindustan Unilever and Tata Consumer gained in a small way in the October 30 session; Varun Beverages fell 5.50%.
"The sector will depend on companies being able to sustain volume growth in the future, while passing on higher input costs.
Festive demand may aid sales in the near term, but sustainable improvement in earnings will come from better operating margins, stable commodity prices and stronger rural consumption."
