HSBC: Consumer Staples Face Growth Challenges Amid Weak Demand

The HSBC report suggests moderate growth for consumer staples in Q1 FY26 due to weak demand and rising competition. Margins remain tight with only 2% EBITDA growth expected, despite a few companies like Marico and Britannia showing promise. Consumer discretionary sees stronger demand, but staples remain pressured.


Devdiscourse News Desk | Updated: 07-07-2025 15:05 IST | Created: 07-07-2025 15:05 IST
HSBC: Consumer Staples Face Growth Challenges Amid Weak Demand
Representative Image . Image Credit: ANI
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The first quarter of FY26 is set to present a challenging landscape for consumer staples companies, according to a report from HSBC. The report underscores how the sector is grappling with weak underlying demand and heightened competition, factors that continue to strain revenue and profit growth.

HSBC's analysis predicts a modest 5% revenue growth and a mere 2% EBITDA growth for the consumer staples sector. The muted performance is attributed to persistently weak demand recovery and high raw material costs, suggesting that even a low base effect and gradual demand improvements may not significantly bolster top-line growth.

In contrast, companies like Marico and Britannia are expected to perform well. Marico is projected to achieve an 18% year-on-year growth, primarily fueled by price hikes and robust performances in its food segment. Britannia is similarly expected to see a 10% year-on-year growth, driven by both volume expansion and price increases. However, overall profitability remains squeezed with limited EBITDA growth potential.

The report highlights that high raw material costs, coupled with an unfriendly demand environment, are likely to curb margin expansion across the consumer staples sector. Nonetheless, the consumer discretionary space shows slightly better prospects with a marginally stronger demand environment. The jewellery industry, in particular, maintains a healthy growth trajectory, bolstered by high gold prices and market expansions.

Despite these dynamics, HSBC has maintained its earnings estimates and target prices, pointing out that companies need to pursue growth trajectories that justify current valuations. The sector will continue to face pressure to find sustainable growth paths in such a competitive environment. (ANI)

(With inputs from agencies.)

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