Parle price hike: Experts discuss rural consumption, rising input costs
Fast moving consumer goods (FMCG) space has been witnessing a continuous rise in input costs. To tackle the rising raw material prices, a lot of companies have been forced to pass on the same to consumers. However, to understand if further price hikes will continue, CNBC-TV18 spoke to Mayank Shah, Senior Category Head at Parle Products, and Abneesh Roy, Executive Director-Institutional Equities, Edelweiss Securities.
Fast moving consumer goods (FMCG) space has been witnessing a continuous rise in input costs. To tackle the rising raw material prices, a lot of companies have been forced to pass on the same to consumers. However, to understand if further price hikes will continue, CNBC-TV18 spoke to Mayank Shah, Senior Category Head at Parle Products, and Abneesh Roy, Executive Director-Institutional Equities, Edelweiss Securities.
First up, Shah said that the company has witnessed a tapering in rural growth. He explained that Parle took price hikes of 5-6 percent in the last quarter and has already announced another hike.
He said, “As far as price hikes are concerned this is the second price hike that has been taken after last year. We took a price hike of about 5 to 7 percent in last quarter beginning of last quarter and again this quarter there is a price hike, which has been planned of about 5 to 7 percent.”
On future hikes, he said that the company may take them if raw material prices continue to rise.
“If we continue seeing the kind of raw metal prices which are prevailing right now, there might be further price hikes. Although we expect prices to taper or input costs to go down, because currently they are significantly higher and these are commodities, they are cycling,” he mentioned.
Meanwhile, Roy believes that a lot of companies in the FMCG space may end up seeing de-growth in terms of volumes for the December- March quarter. Roy expects Hindustan Unilever (HUL) to see a margin expansion on a quarter-on-quarter (QoQ) and year-on-year (YoY) basis.
Roy said, “This time we expect the real volume growth to be negative for many companies in December quarter and possibly even March quarter. I expect Q4 also to get impacted in terms of rural slowdown.”
He added, “Hindustan Unilever discretionary will finally see growth even on a two-year basis, which is going to drive margins also. So, Hindustan Unilever, we expect EBITDA margins to expand quarter-on-quarter and year-on-year.”
Watch the video for the full interview.
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