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Q1FY27 FMCG growth momentum sustained; supported by stable demand despite Middle East conflict and raw material inflation

* Demand remains resilient across urban and rural markets, with Q1FY27 sales trend broadly in line with Q4FY26. While crude-linked input cost saw a temporary uptick following the Middle East conflict, recent commodity trends indicate easing inflationary pressure and a gradual stabilisation in raw material cost

* Most FMCG companies undertook low-to-mid single-digit price hikes in Q1FY27 to mitigate earlier input cost inflation. However, with raw material prices moderating, the need for further pricing intervention appears limited versus earlier expectation of further price hike. However, given the current volatile environment (geopolitics and El-Nino) near-term outlook remains cautious for the sector

* Key things to watch out: Management commentary on El-Nino impact on sustenance of demand, especially in rural and raw material inflation outlook

Sector View

* Demand remains stable across urban and rural markets, with Q1FY27 sales likely to be in line with Q4FY26. While crude-linked input cost rose following the Middle East conflict, recent commodity trends indicate easing cost pressure. Most FMCG companies took low-to-mid single-digit price hike in Q1FY27 and further pricing actions are expected to remain limited if input cost continue to stabilise

* Key Raw Material Price Trends: Brent crude, palm oil and HDPE prices increased by 10%/14%/21% YoY, respectively, but declined by 29%/6%/11% QoQ (-34%/+1%/-12% MoM). Meanwhile, Robusta coffee prices remained broadly flat YoY but increased 8% QoQ and MoM

Our Coverage Universe

* Bajaj Consumer: BAJAJCON growth strategy is centred on the turnaround of its core ADHO franchise and the scaling up of its non-ADHO portfolio. ADHO delivered ~25% growth in FY26, driven by volume-led initiatives, strategic pricing, higher brand investments, and distribution expansion under Project Aarohan. Simultaneously, the company aims to more than double its Growth Portfolio (Non-ADHO) revenue, from INR 2.25 Bn in FY26 to INR 5 Bn, in the next three years, supported by premiumisation, innovation, and an expanding distribution network

*In Q1FY27, we expect revenue to grow 27.5% YoY, driven by ~8% volume growth, strategic pricing actions in ADHO, distribution expansion, and continued scaling up of the Non-ADHO portfolio. EBITDA margin is anticipated to expand by 665 bps to 21.8%, while PAT is projected to increase by 63.4% YoY to INR 620 Mn in Q1FY27E

* CCL Products: CCLP is entering a utilisation-led growth phase, supported by higher contribution from premium Freeze-Dried Coffee (FDC) and small packs, which continue to improve profitability. Stabilising coffee prices are enhancing demand visibility and reducing working capital requirements. The branded coffee business remains a key growth driver, aided by distribution expansion and premiumisation. With the major capex cycle complete, improving cash flows are likely to support margin expansion and steady debt reduction

* In Q1FY27, We expect revenue to grow 16.4% YoY, driven by ~20% volume growth, as demand remains resilient, with minimal impact from the Middle East conflict. Additionally, higher capacity utilisation at the Vietnam freeze-dried coffee (FDC) facility is expected to support growth. We forecast realisation to decline by ~3–4% due to lower coffee prices. EBITDA margin is projected to expand by 67 bps to 15.7%, while PAT is expected to increase by 55.6% YoY to INR 1,128 Mn in Q1FY27E

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