After five quarters of decline, fast moving consumer goods (FMCG) companies experienced positive volume growth in Q4FY23, largely due to improved performance in urban markets. FMCG prices grew in the same period, despite dwindling volumes, due to high commodity prices. However, with commodity prices now softening, the sector’s fortunes could reverse. The category outperformers are the food & beverage and home care sectors, while the underperformers are OTC healthcare. HDFC Securities expects sustained improvement in gross margins across most FMCG companies, while Nomura notes that earnings will be supported by EBITDA margin expansion and stable demand.