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What is the story about?
India's fast-moving consumer goods (FMCG) sector could be headed for its strongest year of growth since the financial year 2022-23 (FY23), with Goldman Sachs expecting earnings momentum to continue through the financial year 2026-27 (FY27) despite concerns over crude oil prices, inflation and monsoon conditions.
Arnab Mitra, India Consumer Analyst at Goldman Sachs, said the brokerage expects consumer staples to outperform small-ticket discretionary categories as pricing power supports revenue growth and margins.
"For the FMCG sector, generally, 2026-27 could be the best year since 2022-23," Mitra said.
The positive outlook follows a strong finish to 2025-26 (FY26). According to Mitra, FMCG companies delivered their highest volume growth, revenue growth and EBITDA growth in the last 12 quarters during the March quarter, easing concerns that earlier strength was driven largely by channel restocking after goods and services tax (GST)-related destocking.
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While higher crude oil prices and monsoon-related risks remain key concerns for investors, Goldman Sachs believes demand trends remain intact. Mitra said pricing-led growth could continue to support earnings even if volume growth moderates slightly, a trend historically seen during periods of price increases.
Goldman Sachs is more constructive on staples than on small-ticket discretionary segments such as fashion. Mitra said inflation typically pushes consumers to prioritise essential spending, which can weigh on demand for non-essential products. He also expects larger FMCG companies to benefit as market share shifts away from smaller players during periods of cost inflation.
In contrast, he expects premium and affluent consumption categories to remain supported by longer-term spending trends, even as parts of the broader discretionary segment face pressure from higher input costs and softer demand.
For the full interview, watch the accompanying video Catch all the latest updates from the stock market here
Arnab Mitra, India Consumer Analyst at Goldman Sachs, said the brokerage expects consumer staples to outperform small-ticket discretionary categories as pricing power supports revenue growth and margins.
"For the FMCG sector, generally, 2026-27 could be the best year since 2022-23," Mitra said.
The positive outlook follows a strong finish to 2025-26 (FY26). According to Mitra, FMCG companies delivered their highest volume growth, revenue growth and EBITDA growth in the last 12 quarters during the March quarter, easing concerns that earlier strength was driven largely by channel restocking after goods and services tax (GST)-related destocking.
Also Watch | Quantum Advisors' Nilesh Shetty sees value in private banks and IT; trims exposure to metals
While higher crude oil prices and monsoon-related risks remain key concerns for investors, Goldman Sachs believes demand trends remain intact. Mitra said pricing-led growth could continue to support earnings even if volume growth moderates slightly, a trend historically seen during periods of price increases.
Goldman Sachs is more constructive on staples than on small-ticket discretionary segments such as fashion. Mitra said inflation typically pushes consumers to prioritise essential spending, which can weigh on demand for non-essential products. He also expects larger FMCG companies to benefit as market share shifts away from smaller players during periods of cost inflation.
In contrast, he expects premium and affluent consumption categories to remain supported by longer-term spending trends, even as parts of the broader discretionary segment face pressure from higher input costs and softer demand.
For the full interview, watch the accompanying video Catch all the latest updates from the stock market here
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