The FMCG sector witnessed some important trends during the December quarter. Many companies have already come out with their quarterly business updates and here's what one can expect from them once they declare their full results.

Among the first important factors to look forward to would be the moderation in demand post the festive season and the weakness in rural India, which many companies like Dabur and GCPL alluded to in their quarterly updates.

Some of the other key trends to observe would be the moderation in raw material prices and premium and discretionary demand remaining steady.

From the updates that have been reported so far, discretionary and premium segments are doing well, while staples and those with a rural focus are struggling for growth. Dabur expects its EBITDA margin for the quarter to drop by 200-250 basis points. On the other hand, D-Mart or Avenue Supermarts saw standalone revenue rise 25 percent during the quarter.

Also Read: Dabur expects low to mid-single digit revenue growth as rural markets remain under pressure

Analysts expect revenue growth for these companies during the quarter to range between the high-single-digits to the high teens compared to the same period last year.

More than the numbers, the key thing to watch would be the management commentary on demand and their views on product pricing. What one should keep an eye out for is whether companies are re-investing gross margin savings back into advertising spends in order to spur demand.

The joker in the pack will be the recovery in rural demand. Companies like Parle etc. have noticed some green shoots in rural demand towards the later part of December. Leading companies within the sector also spoke of a marginal recovery in rural sentiment towards the end of the quarter. Easing commodity inflation, higher crop realisations, ongoing government interventions and a likely stimulus in the Union Budget can provide a further fillip to rural demand.

Lastly, on the valuation front, FMCG stocks have always traded at stiff multiples. While they are off their peaks this time around, they still trade at a 10-15 percent premium compared to their long-term averages.