These four factors could drive FMCG next year, Abneesh Roy lists top picks

The Nifty FMCG Index ended 2023 with a return of nearly 30% primarily driven by easing inflation and better gross margin. However, rural sales were muted. Tata consumer, ITC, and Nestle were among the top gainers, while Dabur, and HUL were laggards with minimal gains.

Abneesh Roy, Executive Director at Nuvama Institutional Equities, expects the coming year to be better for the leading FMCG players driven by three key factors: better volumes, market share recovery, better pricing power. He expects improved foreign institutional investor (FII) inflows into the sector to add to the strength.

Although December quarter volumes will remain low, Roy expects a recovery in volume growth, due to company actions and deflationary effects. He pointed out that the bigger players are also taking proactive measures to fight competition from smaller players in products such as detergents, tea etc. This will help them regain lost market share. Also, prices, which were weak in calendar year 2023, are anticipated to improve, returning to a normal 2-4% compound annual growth rate (CAGR).