FMCG margins get a leg up on lower input costs, higher product prices

Paint, soap makers to ride on lower crude oil & palm oil; weaker farm produce to aid F&B sector

While consumption demand in rural and urban markets remains under pressure, fast-moving consumer goods (FMCG) companies have some reason to cheer. With the prices of crude oil and palm oil hovering near their three-month and five-month lows, respectively, the input cost inflation for companies making paints and soaps, such as Asian Paints, Hindustan Unilever (HUL), Godrej Consumer Products and Pidilite, could come down. Interestingly, most of these companies have already reduced the promotional intensity and/or hiked prices of their products to reflect the increase in input costs seen earlier. Both these factors will boost their margins in the near term.