Credit: Vishal Pawar
Credit: Vishal Pawar

Diwali Comes To The Rescue Of India's Economy


Growth in India's consumer sector is seen to have recovered in the July-September quarter largely owing to increasing urban demand and the festive season, says a Nomura report.

According to the Japanese financial services major, consumer firms are expected to report average net sales growth of 8.6% year-on-year with EBITDA growth of 8.4% in the second quarter of this fiscal.

Growth in India's consumer sector particularly the household and personal care segment was held back in recent quarters largely due to macro issues.

While the third quarter (October-December period) and fourth quarter (January-March) of 2016-17 were hurt by demonetisation, the first quarter of the current financial year was derailed due to destocking ahead of Goods and Services Tax (GST) implementation, the report said.

"However, beyond all the macro issues, we believe growth remains on the right track," the report said.

It further said that "we expect a continued strong recovery in urban consumption and steadiness in rural consumption. We believe overall volume growth will likely pick up meaningfully in the coming quarters".

For the Food and Beverage (F&B) sector, Nomura expects revenue to grow 4.7%, while for home and personal care revenue growth of 8.6% is likely, while for the retail sector it is expected to be around 16.4%.

"We expect growth recovery will happen in the second quarter of this financial year due to continued recovery in urban demand, trade inventory normalisation and the festive season," Nomura said in a research note.