While most commodities have witnessed significant correction from their peak levels on a sequential as well as year on year basis, inflation persists across key commodities such as Milk, Sugar, Tea, Wheat, Wheat Flour and Glass on a year on year basis. It needs to be noted that since government has banned exports of several agri commodities for FY24, there is a possibility that prices may stabilise or decline over the next few months.

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Nirmal Bang expects gross margins to improve for most players in the consumer sector, as there has been a double-digit price correction in most of the key raw materials.

The quarterly average Brent crude price have come off significantly by 31 percent year on year and 4 percent sequentially in first quarter of FY24, due to weak global sentiments.

Furthermore, edible oil price trends are positive due to cooling down of international and domestic prices. ‘Soyabean oil Refined Mumbai’ prices were down by 3.6 percent month on month and down 16 percent quarter on quarter. Marico is expected to be a beneficiary as a result of these price trends though price cuts taken in certain part of the portfolio to drive volume growth may partially offset the entire flow through of raw material decline.

Paint industry may see a setback in the first quarter of FY24 as Titanium Dioxide (TiO2-China) prices are up 2 percent quarter on quarter, despite a decline in crude prices. This may keep costs elevated for the paint companies like Asian Paints and Berger Paints, according to an analysis by Nirmal Bang. Both paint stocks are lower in trade at 11 am on July 3.

The shares of Britannia, Nestle and Emami are trading in the red at 11 am on July 3, while Dabur, Marico and ITC are upto 0.5 percent higher.