New Delhi [India], February 17 (ANI): FMCG companies' margin gains could remain limited despite reporting aggregate revenue growth of about 9 per cent year-on-year (YoY) in the third quarter of FY26, as growth was partly driven by GST-related adjustments, price corrections in key categories, and continued competitive pressure, according to a report by Systematix Group.

The report noted that FMCG companies, also referred to as consumer staples companies, delivered approximately 9 per cent YoY revenue growth for the top companies, supported by volume growth of +6 per cent YoY.

Also Read | CBSE Class 10, 12 Board Exams 2026 Begin: Central Board of Secondary Education Exams Start in Single Shift, Lakhs of Students Appear Across India; Nervousness, Excitement on Day 1 (Watch Videos).

Although this marked a meaningful improvement compared with revenue growth of +7 per cent in 2QFY26 and +5 per cent in 3QFY25, the report highlighted that margin expansion may remain limited as part of the revenue growth was supported by GST cuts and restocking activity rather than strong pricing power.

It stated, "Consumer Staples Ex-GST growth crucial; margin gains could be limited".

Also Read | What Is Qwen 3.5? Everything You Need To Know About Alibaba's New AI Model.

The report stated that GST cuts in categories such as biscuits, noodles, dairy, snack foods, toothpaste, hair oils, soaps, chocolates, and coffee led to increases in volume, grammages and sales realisations, supporting overall growth.

In addition, the report noted that channel restocking during November-December also contributed to higher revenues. This followed significant GST-related trade disruption and destocking during September-October, which had impacted 2QFY26 sales by around 200-400 basis points.

While restocking helped improve sales performance in the third quarter, it does not necessarily translate into sustained margin improvement.

The report further stated that value growth declined in categories such as tea and edible oils due to price corrections, which limited revenue gains. Price corrections typically reduce realisations for companies, affecting their ability to improve margins.

At the same time, growth moderated in categories such as detergents and paints due to elevated competitive intensity. Increased competition in these segments restricts companies' ability to increase prices, which in turn limits profitability expansion.

Despite these challenges, the report noted that FMCG companies saw improved volume growth and overall revenue performance during the quarter.

However, it emphasised that consumer staples companies' growth excluding GST-related benefits will be crucial in determining the sustainability of revenue and margin performance going forward.

So the report indicated that while FMCG companies reported improved revenue growth in 3QFY26, margin gains could remain limited due to GST-related factors, price corrections in certain categories, and continued competitive pressures across key segments. (ANI)

(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)