India Consumer: Growth Momentum To Remain Strong In 1Q Despite Pricing Actions

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India Consumer: Growth Momentum To Remain Strong In 1Q Despite Pricing Actions

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02 Jul 2026 08:10:14 ET │ 17 pages

India Consumer

Growth Momentum To Remain Strong In 1Q Despite Pricing Actions

CITI'S TAKE

Vismaya Agarwal, CFA AC

We expect Indian Consumer Staples companies to deliver another quarter +91-22-6175-9886

of improving performance. Volume growth should remain resilient vismaya.agarwal@citi.com

sequentially despite 2–5% price hikes, supported by consumer prices that

remain below pre-GST levels in several categories and the tendency for

large organised players to gain market shares during inflationary periods.

Profitability across our coverage (ex-ITC) is also likely to remain broadly

stable in 1Q, aided by pricing actions and benefits from lower-cost inventory

and commodity covers. With key commodity costs now easing following the

sharp inflation seen in April–May, the need for further price hikes appears

limited. This should help sustain the improving demand and volume

trajectory into 2HFY27, even as GST-related benefits begin to enter the

base. Overall, we remain selective; prefer Food & Beverages over Home &

Personal Care. Our top Buys are Tata Consumer, Godrej Consumer,

Britannia; top Sells are ITC, Colgate India, United Breweries.

What to watch out for —

– Demand trends: Management commentary on the evolving El Niño situation and

its potential impact on rural demand will be closely monitored. We believe the

spatial distribution of rainfall will be key. Unlike previous drought cycles, the risk

of a sharp rural demand slowdown appears lower given improved rural resilience.

– Further pricing actions: Crude-linked commodity costs have corrected after the

sharp increase witnessed during April–May. We will assess whether companies