GST transition : Q2 FY26 demand for consumer staples firms is steady; growth is hampered by the Motilal Oswal

GST transition: According to a survey by Motilal Oswal Financial Services, consumer staples firms in the nation had steady demand patterns during the July to September quarter (2QFY26), however the longer monsoon season and the GST transition had an impact on overall performance.

According to the research, packaged meals were less affected by the GST changeover than personal care goods.

It said, “Consumer: Staples companies witnessed stable demand trends; however, the GST transition and an extended monsoon period weighed on overall performance during the quarter.”

Nestle, ITC, and other companies did well in the packaged goods area. While ITC’s FMCG division had robust growth throughout the quarter, Nestle recorded an 11% increase in sales. Personal care businesses, however, found it difficult to keep up.

Dabur and Godrej Consumer Products Ltd (GCPL) observed a 3–4% reduction in sales, while Hindustan Unilever Ltd (HUL) saw a volume loss of around 2%.

The reduction was mostly ascribed to changes in the trade pipeline and difficulties caused by the GST changeover.

Colgate-Palmolive’s problems persisted, as seen by the 6% drop in sales throughout the quarter. The majority of businesses reduced prices and increased the grammage in low-unit packs (LUPs) in order to counteract the effects of GST and pass the savings on to customers.

Despite a low base, the quick service restaurant (QSR) category also saw persistent demand weakness, suggesting that the rebound in discretionary spending is still not uniform.

Motilal Oswal maintained ratings for other firms it covers, but reduced Dabur from a “Buy” to a “Neutral” rating due to persistent executional problems.

According to the research, the pace of profit downgrades has slowed, and the second quarter results were generally in line with forecasts.

The survey stressed that the markets presently seem to be in a stronger shape compared to last year, despite the fact that Indian stocks have produced a poor return over the last year.

It is believed that the profits cycle is bottoming out, and in the next quarters, growth will pick up speed, reaching double digits.

“We continue to emphasize that the Indian markets now seem to be in a healthy state compared to last year,” the study said. Growth is predicted to soar into double digits when the profits cycle bottoms out.