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We expect the Emkay FMCG universe to report double-digit revenue growth (except ITC) in 2QFY27, driven by resilient demand, price hikes, and a benign base (GST rate cut impacted sales in 2QFY26). Volume growth should remain broadly similar to 1Q levels for most companies. Gross margin is likely to be under pressure yoy (except for Marico) due to higher input costs (mainly crude-linked derivatives and palm oil). Impact on EBITDA margin should be lower due to cost efficiencies and operating leverage, despite elevated A&P spends. GCPL, Marico, and Dabur have reported double-digit revenue growth in their quarterly business updates but also highlighted margin pressure. Our top picks are Marico, BRIT, and GCPL. We also like Honasa, Bikaji, and Gopal Snacks.

Overall demand and margin situation

Overall demand conditions were resilient in 2QFY27 amid a volatile operating environment due to geopolitical conflicts, rising inflation, and a weak monsoon. Growth to be driven by price increases taken to offset input cost inflation and a low base (GST rate cut in base quarter). Demand should benefit to some extent from the upcoming festive season, but rising inflation and El Niño are key downside risks to any uptick in demand, especially in the rural areas. Among key raw material prices, crude-linked derivatives and palm oil were inflationary but saw some easing due to the decline in crude prices and the cut in import duty on palm oil (full benefit to accrue in 3Q though). However, some raw materials such as copra, coffee, etc, saw price declines.

Marico

Consolidated revenue to grow in double-digits, led by strong growth in India on the back of near double-digit volume growth. Parachute volume growth improved sequentially to the low teens, aided by price cuts, in our view. VAHO reported its sixth consecutive quarter of doubledigit growth. Foods and premium personal care (including digital-first brands) continued their strong growth momentum. Gross margin to improve yoy due to the sharp decline in copra prices and a better mix. EBITDA growth to be in mid-twenties.

Godrej Consumer Products

Consolidated revenue growth to be strong (high teens) led by high single-digit volume growth. India business to grow in teens with high single-digit volume growth despite 100-150bps impact from inventory correction. Indonesia growth to accelerate to high teens (on a low base) while GAUM to continue growing in strong double digits. Margins to remain under pressure on higher input costs, leading to double-digit EBITDA growth.

Dabur

Consolidated revenue growth to be in double digits, led by double-digit growth in the India business and high-teens growth in International. Growth is likely to be driven by double-digit growth in HPC and foods & beverages. Margins are expected to decline yoy due to cost inflation, resulting in high-single digit EBITDA growth.

Other companies

We expect Britannia’s revenue growth at ~13% yoy (volume-led) benefiting from resilient demand in packaged foods and improved execution. Margin should be under pressure, leading to high single-digit EBITDA growth. Honasa’s revenue growth to stay strong (mid-twenties) led by high-teens growth in Mamaearth and mid-40s growth in younger brands. EBITDA margin to improve yoy due to operating leverage. HUL’s revenue to grow ~11% yoy (~5% volume growth) led by the home care segment. Margins are likely to be under pressure due to input cost inflation, resulting in mid-single-digit EBITDA growth. We expect ITC’s net sales to grow 3% yoy, while EBITDA is likely to decline >15% mainly due to the drag from the cigarettes segment (high single-digit volume decline expected). Colgate’s revenue growth to be strong at +14%, albeit on a very low base, while EBITDA margin should decline yoy due to higher A&P spends and impact from inverted duty structure. Nestlé to report strong growth of 17% yoy on a benign base and improved execution. We expect Emami to post double-digit revenue growth, helped by recent acquisitions and a low base. EBITDA is likely to contract by >200bps. Bikaji is expected to report a low double-digit revenue growth (exPLI), while EBITDA is expected to decline yoy due to higher costs. Gopal Snacks revenue growth to be strong (>20%) but on a low base, with EBITDA margin expansion of >200bps yoy.

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