Synopsis: Rural-led FMCG recovery lifts volumes and margins; Trent revenue up 17%, D-Mart 13.2%, Titan 40% growth. Brokerages bullish on VBL, Nestle, Marico, Zydus Wellness stocks.
FMCG companies after being impacted by the implementation of the Goods and Services Tax (GST), the market for fast-moving consumer goods (FMCG) in India is poised for strong growth as it shows evidence of renewed consumer demand. With demand returning to volume-driven growth, it means that not only will there be an increase in the price charged for the products, but that people will actually buy more of them.
Revival of the sector
Based on this renewed demand, operating margins of many of the large FMCG players are now recovering, resulting in improvements in their profitability over December compared to profits in their previous quarter, which was September. Another positive development for the FMCG industry is the ability to increase operating margin due to the increased efficiencies gained as a result of increased volume being sold and due to the decline in the price of many of their key raw materials.
Rural Momentum Drive
Most of the recovery in the FMCG sector can be attributed to the continued strong performance of the rural market, which is significantly outperforming the urban market. The combination of declining rural inflation, increasing MSP prices, increasing agricultural output, and increased affordability levels in rural India has increased rural purchasing power. This has created a greater demand for everyday consumer products, which continue to be a major contributor to the growth of the rural economy for many FMCG companies.
Modern Retail Drive India’s Consumption-Led Economic Recovery
The rebound of the economy has also been supported by the continued strength of consumer brands, as evidenced by strong volume growth reported by Dabur, Marico, and Godrej Consumer Products across multiple key categories such as hair oil, oral care and packaged food. Given these statistics, it appears likely that established brands not only have the largest share of growth resulting from increased demand but also that these same brands have also increased their market share in their respective industries.
Organised retail and e-commerce have been the key growth drivers throughout the recovery phase. Modern trade and e-commerce (including hyper-local delivery options) have been very successful in achieving double-digit growth rates. Both the increase in the availability of these retail channels and the strong emphasis being placed on promotion have enabled FMCG companies to be more successful in capturing the urban and rural segments of India.
Retailer companies (such as Trent, D-Mart and Titan) have experienced similar growth as other businesses experiencing a resurgence of consumption in India. The increase in consumer confidence and demand during the festive seasons has created an additional tailwind for these companies and is reflective of the broader resurgence of India’s overall consumption trend.
Retail stocks showed strong growth
Trent Limited reported strong revenue growth in Q3FY26 and 9MFY26, reflecting continued momentum in consumer demand. Standalone revenue from the sale of products grew 17% year-on-year to Rs. 5,220 crore in Q3FY26, while revenue for the nine-month period ended December 2025 increased 18% to Rs. 14,604 crore.
For Q3FY26, Avenue Supermarts Ltd reported standalone total revenue of Rs. 17,613 crore, registering a year-on-year growth of 13.2%. For the nine-month period ended December 31, 2025 (9MFY26), the company’s total revenue stood at Rs. 49,764 crore, reflecting a healthy year-on-year growth of 14.9%, driven by steady consumption demand and continued store-led expansion.
Titan Company’s consumer businesses delivered robust growth of approximately 40% year-on-year in Q3FY26. During the quarter, the company added a net 56 stores, taking its total retail network to 3,433 stores across formats.
Varun Bevarages Ltd
Morgan Stanley has maintained an overweight rating on VBL with a target price of Rs 600, 26% upside from Friday’s closing price of Rs. 474.35. Analysts believe that management commentary during 4QCY25 earnings is likely to reflect an optimistic outlook for VBL’s India business in 2026. Additionally, the company’s focus on portfolio expansion in existing markets is considered a major driver for sustainable growth. Currently, VBL trades at a 47x 12-month forward P/E, which is below its 3-year historical average of 54x.
Nestle India Ltd
Geojit BNP Paribas has issued a Buy recommendation on Nestle India, setting a target price of Rs. 1,470, 14% upside from Friday’s closing price of Rs. 1,293.30. Brokerage gave a target based on 74x FY27E P/E. The company’s focus on faster innovation, rural distribution, premiumisation, digital-first launches, and Out-of-Home expansion is expected to drive sustained volume-led growth.
Zydus Wellness Ltd
Motilal Oswal gave a Buy rating on Zydus Wellness, with a target price of Rs. 575, which implies an upside potential of 37% from Friday’s closing price of Rs. 418.65.
The company is scaling rapidly, with revenue rising to ~INR 40 billion from under INR 5 billion in 2018. The company’s strong and well-diversified distribution backbone, supported by 1,950+ distributors, a 2,800+ strong field force, and 25 warehouses including 21 cold-storage facilities, further underpins the valuation.
Marico Ltd
ICICI Direct maintained its positive view on Marico, assigning a target price of Rs. 870 and an upside potential of 17% from Friday’s closing price of Rs. 740.90. Marico’s core portfolio is projected to deliver healthy growth at a ~10% CAGR over FY25–28E, supported by steady demand and brand strength. Margin pressures are expected to ease in H2FY26, with margins expanding by around 200 bps in FY27.
Additionally, the food portfolio is likely to return to a stronger growth trajectory from Q4FY26 and grow at 25%+ CAGR, reaching nearly eight times FY20 levels by FY27E, driven by distribution expansion and product innovation.
In summary, India’s FMCG sector is showing clear signs of recovery, driven by stronger rural demand, improving margins and a return to volume-led growth. Robust performance from leading brands and organised retailers reflects improving consumer sentiment. With positive brokerage outlooks on key stocks, the sector outlook remains encouraging, supported by expanding modern trade, e-commerce penetration and sustained consumption momentum.
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