El Nino impact in sight even as top FMCG firms bet on rising India consumption

India's leading retail goods companies have projected strong revenue growth for the April-June quarter, expressing confidence that resilient consumer demand, improving rural sentiment and easing input costs will support business momentum even as they keep a close watch on inflationary pressures and the potential impact of El Nino-induced weather volatility.

Marico, Godrej Consumer Products Ltd (GCPL) and Dabur India, in their first-quarter business updates ahead of earnings, forecast strong top-line growth for the quarter ended June 30.

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Marico expects consolidated revenue to grow in the early twenties, while GCPL has guided for high-teens revenue growth. Dabur, meanwhile, expects double-digit growth in both consolidated revenue and profit after tax, indicating that demand has remained resilient despite geopolitical uncertainties and elevated raw material costs.

The upbeat outlook comes amid broad-based growth across domestic and international businesses.

Companies said rural demand continues to outpace urban markets, while newer channels such as e-commerce, quick commerce and modern trade remain key growth drivers, adding that easing commodity prices in the latter part of the quarter are expected to gradually improve margins after months of cost pressure.

Growth broad-based across categories and markets

Marico reported that its India business accelerated further, delivering double-digit underlying volume growth, led by a strong performance from its flagship Parachute coconut oil franchise, which posted its highest volume growth in several quarters.

Value Added Hair Oils continued to grow in the twenties, supported by premiumisation, wider direct reach through Project SETU and product innovation. Its Foods and Premium Personal Care portfolio also continued to scale up, while the international business recorded mid-teen constant currency growth, driven by Vietnam and the Middle East and North Africa (MENA) region.

GCPL said growth was broad-based across categories and geographies. The company expects double-digit revenue growth in its standalone India business, backed by high-single-digit underlying volume growth, while Indonesia returned to mid-teen growth as competitive pressures eased. Its Godrej Africa, USA and Middle East (GAUM) business also delivered another strong quarter with double-digit sales growth, reflecting sustained consumer demand across markets.

Dabur said its India FMCG business maintained sequential growth momentum, led by strong performances across hair oils, shampoos, oral care, foods and beverages. Hair oils and shampoos are expected to deliver high-teen growth, while the oral care portfolio—including Meswak and its Herbal range—continued to gain traction. The company also reported strong growth in emerging channels such as e-commerce, quick commerce and modern trade, while rural markets continued to outperform urban centres.

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While demand remained firm, companies flagged weather-related risks as a key variable for the rest of the fiscal. The emergence of El Nino conditions has raised concerns over possible disruptions to the monsoon, which could affect agricultural output, rural incomes and discretionary spending. For consumer goods companies, which derive a significant share of sales from rural India, a weak or erratic monsoon can weigh on purchasing power, particularly for everyday household and personal care products.

Even so, companies said they remain confident that the impact, if any, would be manageable.

El Nino emerges as a key watchpoint

El Nino, Spanish for "the little boy", has emerged as a key watchpoint for consumer goods companies. Often linked to weaker monsoon rains in India, it can weigh on farm output, rural incomes and consumption. The IMD has said weak El Niño conditions are currently prevailing over the equatorial Pacific.

"Looking ahead, we remain optimistic about consumption trends, while closely monitoring the evolving inflationary conditions and the impact of El Nino on the monsoon," Marico said, adding that it remains committed to delivering sustainable and profitable volume-led growth over the medium term.

GCPL said input costs remained elevated for most of the quarter due to crude-linked inflation and sourcing challenges but have begun easing in recent weeks.

"On the commodity front, input costs remained elevated through most of Q1... Encouragingly, costs have begun to ease in the closing weeks of the quarter," the company said.

It added that margins are expected to recover progressively through calibrated pricing actions, cost-saving programmes and media optimisation. While El Nino could increase weather volatility across key markets, the company said its geographically diversified sourcing network and product portfolio provide resilience, and it does not foresee any major disruption to its business.

Dabur also struck an optimistic note despite geopolitical uncertainties and hyperinflationary pressures in some overseas markets.

"Overall, the underlying fundamentals of the business remain strong," the company said, adding that it remains well positioned to benefit from improving consumption trends, strengthen cost competitiveness and leverage digital capabilities for sustainable growth. It also expects demand in its international markets to improve in the coming quarters as conditions in West Asia stabilise.

For the FMCG sector, the first quarter suggests that demand has remained resilient despite volatile commodity prices and global uncertainties. With raw material costs showing signs of moderation and rural consumption holding up, companies are entering the rest of FY27 with greater confidence, although the progress of the monsoon and El Nino-related weather developments will remain closely watched.

(With inputs from PTI)