A Centrum report predicts India's consumer sector will see a gradual demand recovery in Q3FY26, led by FMCG consumption and a strong jewellery segment. FMCG is seen growing 6.6% YoY, while jewellery is expected to see a 40% topline surge.
India's consumer sector is expected to witness a gradual demand recovery in the third quarter of FY26, led by a pick-up in Fast-moving consumer goods (FMCG) consumption and strong momentum in the jewellery segment, according to a preview report by Centrum Institutional Research.
FMCG Sector Outlook
The brokerage expects the FMCG sector to benefit from the impact of GST rationalisation, restocking by trade channels and supportive macroeconomic conditions such as easing inflation, benign crude prices, healthy monsoon and improved rural sentiment. Centrum estimates FMCG to post 6.6% year-on-year revenue growth in Q3FY26, driven by nearly 4% volume growth. Gross margins are projected to expand by 17 basis points year-on-year to 52.2%, while EBITDA margins may improve by 35 basis points to 26%.
Key Performers in FMCG
Among FMCG players, companies such as Dabur, Godrej Consumer Products, Nestle India and Hindustan Unilever are expected to deliver steady performance, aided by favourable raw material costs and a seasonal boost from winter-centric portfolios, the report said.
Jewellery Segment to Shine
The jewellery segment is likely to remain the standout performer in the quarter, supported by a sharp rise in gold prices up nearly 70% year-on-year and sustained festive and wedding demand. It said the leading jewellers to report over 40% topline growth, although volumes may remain muted due to high gold prices.
Leading Jewellers' Performance
Titan and Kalyan Jewellers are expected to benefit from strong store expansion and continued market share gains from the unorganised sector, even as margins may see mild pressure due to a higher share of plain gold jewellery.
Muted Growth for Paints Sector
In contrast, the paints sector is expected to post muted growth due to the impact of an extended monsoon and seasonally weak demand during inauspicious periods. As per the Centrum estimates, paints sector to record 3.4% year-on-year growth, with margin expansion aided by deflation in raw material costs, though EBITDA margins could see some contraction due to higher competitive intensity.
Mixed Performance in Footwear
The footwear sector is likely to see a mixed performance, with Bata and Relaxo expected to report flat to low single-digit growth, while Metro Brands may continue to outperform peers with double-digit growth driven by store additions and festive demand.
Challenges in Retail and QSR
Retail companies are expected to report mixed trends, with players such as DMart and Trent witnessing moderation in growth amid rising competition and a high base effect. Quick commerce expansion and higher discounting are also expected to weigh on margins in parts of the organised retail segment. The quick service restaurant (QSR) sector is likely to remain under pressure due to soft demand and muted same-store sales growth, although Jubilant FoodWorks is expected to outperform peers on the back of continued store expansion and relatively resilient delivery-led growth.
Cautiously Optimistic Outlook
The report maintains a cautiously optimistic outlook on the consumer sector, with demand recovery expected to strengthen further in the coming quarters as the full impact of policy support and improving macro conditions feeds through to consumption. (ANI)
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