Q2 results preview: Destocking prior to GST 2.0 may impact FMCG sales

FMCG companies face muted sales in July-September as distributors slow purchases ahead of GST-driven MRP cuts, with Hindustan Unilever citing a short-term impact

Fast-moving consumer goods (FMCG) companies are expected to see pressures on their performance, especially on the top line, in the July–September quarter, as buying from distributors took a hit while the trade slowed down their purchases in anticipation of new stock with updated maximum retail prices (MRP). The government had announced changes to the goods and services tax (GST) on many categories, which led to a cut in MRP from September 22.

 

The government had reduced GST rates on items ranging from food products to shampoos and soaps.

 

Distributors from the Central, Western, and Eastern regions have seen muted growth.