Consumer sentiment largely stable, rural demand improving: Marico MD Saugata Gupta

Growth of listed companies alone doesn’t capture the full picture of consumption trends, said Marico MD Saugata Gupta, noting that consumer demand in the country largely remained stable in the March quarter, helped by a pickup in rural areas.“Commentary for unlisted players, including Indian subsidiaries of multinational corporations, D2C players and regional brands, indicates a slightly better performance, underscoring broader demand resilience,” Gupta said at Marico’s earnings call post March quarter results. “Data of some of the D2C and unlisted players does not get captured and the growth could be a tad higher,” he said.

Over the past week, top executives of nearly a dozen consumer goods multinationals, including Unilever, Colgate Procter & Gamble, Reckitt, PepsiCo, and L’Oreal in their earnings calls cited India as a major growth driver.

Some have flagged a softness in urban markets due to slow wage growth and inflation squeezing household budgets, but predicted a strong recovery in this fiscal year.

The company behind Parachute and Saffola brands posted a 20% year-on-year increase in revenue during the quarter ended March to ‘2,730 crore, with 7% volume growth in its India business. Net profit rose 8% to ‘343 crore. Gross margin contracted by 300 basis points, impacted by the rise in copra and vegetable oil prices, which was partly offset by price hikes.

In comparison, Hindustan Unilever, the country’s largest fast-moving consumer goods company, whose performance is considered a proxy for broader consumer sentiment in India, posted a 2% growth in underlying volume during the March quarter, although on a much higher base.

Marico said retail and food inflation are moderating and that bodes well for overall consumption in FY26. Government schemes, rise in MSPs and healthy monsoon forecasts will also aid rural demand.

Marico’s food business with ‘1,900-crore revenue in FY25 was 5 times bigger than FY20 while the digital-first portfolio clocked average recurring revenue of ‘750 crore.

“Consumer sentiment remains largely stable, supported by improving rural demand. Margins for most players are under pressure due to input cost pressure,” Gupta said. He expects Marico’s core categories to gradually improve growth trends due to moderating inflation and the promise of a healthy monsoon season. “This will be further aided by our ongoing initiatives to support select general trade channel partners and transformative expansion in our direct reach footprint under Project Setu,” Gupta said.

In FY25, revenue from operations was up 12% at ‘10,831 crore, with underlying volume growth of 5% in the India business and constant currency growth of 14% in the international business. The company said it has seen structural gross margin expansion of over 1,000 bps in foods over the past 2 financial years and expects the segment to double by 2027 with a CAGR of 25%.

“If you look at foods, I think there is a huge runway for growth. And the reason is that we have not even tapped the general trade at all for food so far. We are also now significantly leveraging the growth of quick commerce…,” said Gupta.