New Delhi [India], July 7 : Consumer staples companies are likely to report moderate growth in the first quarter of FY26 as margins remain under pressure, according to a recent report by HSBC.
The report highlighted that weak underlying demand and strong competition continue to weigh on the sector, limiting the overall revenue and profit growth during the quarter.
HSBC stated, "Consumer staples companies have been bearing the brunt of weak underlying demand amid high competitive intensity".
The report in its Q1FY26e preview highlighted that the consumer staple companies to post 5 per cent revenue growth and only 2 per cent EBITDA growth.
The muted performance is attributed to ongoing challenges such as weak demand recovery and elevated raw material costs.
The report mentioned that although there is a gradual improvement in demand and a low base effect, it may still not be enough to deliver strong top-line growth.
Among the top performers in the sector, the report stated that the Marico is projected to post 18 per cent year-on-year growth, mainly driven by price hikes and strong performance in its foods segment. Britannia is also expected to deliver 10 per cent growth year-on-year, supported by both volume expansion and price hikes.
However, the report also pointed out that the overall profitability remains under pressure with only 2 per cent EBITDA growth anticipated.
The report noted that raw material costs remain elevated, which, combined with an unfavourable demand environment, is likely to restrict margin expansion across the sector.
On the other hand, the consumer discretionary space appears to be faring slightly better. The report notes that the demand environment is marginally stronger in this segment.
The jewellery industry, in particular, continues to grow at a healthy pace, supported by high gold prices, market share gains, and ongoing network expansion.
Despite these developments, HSBC has made no changes to its earnings estimates or target prices in the report, noting that companies need to chase growth that can justify current valuations.