FMCG makers looks volume-based growth in FY’27 with EBITDA improvements as inflation softens

Shifting Gears to Volume Growth Amid Easing Inflation

India's fast-moving consumer goods sector is on the cusp of a promising turnaround.

Major players like Hindustan Unilever, Dabur, Marico, and Godrej Consumer Products are optimistic about achieving volume-based expansion in the financial year 2027. This pivot comes as inflation cools, stabilizing key commodity prices such as coconut oil, vegetable oils, and SLES. Executives from these companies have highlighted during recent earnings calls that the era of price-driven growth is giving way to higher sales volumes, driven by improving consumer sentiment and affordability. Rural markets, which have consistently outperformed urban areas, are leading this resurgence with stronger demand for everyday essentials.

Key Drivers Fueling Optimism for FY27

Several factors are aligning to support this positive outlook.

Input costs have eased significantly, with corrections in copra prices by 25 to 30 percent, allowing firms to maintain or even expand margins without frequent price hikes. Consumer confidence is rising, as reflected in recent RBI surveys, signaling greater willingness to spend on household goods. Urban demand is showing sequential improvements, while rural consumption remains robust, growing faster than city markets. Companies expect to pass on some benefits to consumers through offers, further stimulating volumes. Overall, the operating environment is steadying, with mid- to high single-digit volume growth already evident in recent quarters.

Dabur India CEO Mohit Malhotra noted in the company's latest earnings discussion,

"As far as inflation is concerned, we saw huge inflation in Quarter 3. Inflation is ebbing a bit, as we see. Coconut oil prices are softening, SLES prices are softening, and vegetable oil prices are also softening. So, the next year growth is going to be more volume-driven growth and not so much price-driven or value-driven growth."

This sentiment echoes across the industry, with leaders emphasizing gradual recovery supported by factors like GST rationalization, higher minimum support prices for crops, and healthy sowing seasons.

EBITDA Gains and Broader Market Expansion

Beyond volumes, EBITDA improvements are a key focus for FY27.

Firms anticipate progressive enhancements in operating profits as margin pressures subside. Hindustan Unilever's CEO and MD Priya Nair pointed to steady improvements in the operating environment and underlying demand, bolstered by recovering consumer sentiment. Godrej Consumer Products expects high single-digit revenue growth domestically while maintaining normative EBITDA margins, with double-digit gains projected from its international operations in Africa, the US, and the Middle East. Marico foresees passing some cost savings to consumers via offers, aiding further demand pickup.

The sector's growth story extends to impressive market projections. Rural basket sizes have expanded notably, underscoring rising purchasing power in non-urban areas. Quick commerce and premium products are adding momentum, with rural and semi-urban demand driving value growth in food categories. Overall, these trends point to a healthier industry trajectory.

In summary, FMCG makers are gearing up for a volume-led FY27, supported by softening inflation, stable inputs, and recovering demand across urban and rural markets. EBITDA margins are set to strengthen, promising sustainable profitability and investor confidence in India's consumption engine.