FMCG companies may continue facing margin pressure in the second half of FY27 as input costs rose sharply in the September quarter. Palm oil prices were about 21% higher year-on-year in September and sugar about 18% higher, in rupee terms, while crude-linked derivatives and packaging materials also emerged as pressure points. Grant Thornton Bharat's Naveen Malpani said pre-results estimates projected operating-margin compression of roughly 45 basis points for major consumer staples companies, with some estimates showing declines of up to 150 basis points. Companies are absorbing part of the costs through efficiency gains, cost cuts, and reduced discounts and advertising, and may raise prices after the festive season, though a meaningful recovery depends on commodity prices easing. The main risk is that consumers trade down to cheaper brands or smaller packs.
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