Fast-moving consumer goods (FMCG) companies are seeing signs of recovery in the third quarter of FY21 after demand saw an uptick during the festive season.
However, growing commodity inflation could impede this recovery, analysts told Business Standard.
The rise in crude oil price could increase the cost of derivatives such as linear alkyl benzene (LAB) and high-density polyethylene (HDPE), the report said.
LAB is an ingredient in detergents, while HDPE is used in packaging materials for essential items such as soaps, detergents, hair oils, creams, shampoos and toothpastes.
"Price hikes will be there in the March quarter (Q4) because companies will not be able to absorb input cost pressures like they did in Q3. But I expect price hikes to be judicious so that consumer sentiment is not impacted much," Mohit Malhotra, chief executive officer (CEO), Dabur India, told the paper.
"A lot depends on what is your portfolio of products and where is the inflation coming from. If price hikes are done in a calibrated manner, the impact will not be severe. Consumers will be able to stomach the price hike," Harsh Mariwala, chairman, Marico was quoted as saying by the paper.
Marico, whose brands include Parachute and Saffola, said its India business recorded double-digit volume growth in the September-December quarter of FY21.
"The quarter was characterised by a faster than expected recovery in consumer sentiment in India, aided by the festival season and a declining COVID-19 graph," the company said in a BSE filing on January 4.