FMCG Q4 earnings wrap-up: Trends surprises and what's next for the sector

On the other hand, smaller FMCG companies such as Bajaj Consumer and Jyothy Labs have exceeded expectations. Bajaj Consumer, for instance, saw 14% growth in revenues, 80 basis points improvement in margins, and a double-digit increase in net profit.

Jyothy Labs, too, has been consistently performing well for the past four quarters, with 13% revenue growth, 430 basis points expansion in margins, and a 60% jump in profit after tax.

Beyond earnings, the FMCG sector has seen some interesting developments. Godrej Consumer has acquired Raymond's consumer business, including Park Avenue. This move has left the street wondering about the valuation and scalability of the deal, especially with the uncertainty surrounding the Park Avenue deos brand.

Additionally, Nestle is considering an acquisition of Ching's, which will be an interesting development to monitor.

Two themes to watch out for in the FMCG sector this year are margin expansion and mergers and acquisitions (M&A). With raw material prices coming off, volume picking up, and rural demand showing gradual recovery, companies are chasing growth through the inorganic route.

Furthermore, valuations of FMCG players are currently in line with their 10-year average, which is prompting investors to look at the cheaper, outperforming FMCG players such as Bajaj Consumer, Jyothy Labs, and Emami.