India Inc’s chief financial officers reported steady festive sales in the month of October, which saw major Indian festivals such as Dussehra and Durga Puja. That said, CFOs have highlighted a challenging macroeconomic environment, including high inflation and the risk of lower Kharif output in rural areas, weighing on sales growth and keeping it below earlier estimates.
India’s retail inflation rose to 5.54% in September, while wholesale inflation climbed to 11.39%. The RBI has also raised its forecast, with retail inflation estimated to reach 6% in the third quarter of financial year 2026-27.
“There are challenges in the market, and some parts of the country are experiencing a degree of weakness. However, it is not as bad as the general impression following the weak monsoon and the significant increase in inflation due to geopolitical developments,” said Anand Agarwal, CFO, V-Mart Retail.
Agarwal added that consumption has not declined but varies across categories and geographies.
“Consumption is not particularly strong, so we should not expect abnormal levels of growth this year. However, normal growth is still possible,” Agarwal said.
Textile and apparel manufacturer, Raymond Lifestyle’s CFO, EC Prasad said that while overall footfalls in shopping malls are coming down, demand for premium offerings has not declined.
“So far, we have been doing well. The secondary sales pickup has been good, and we have not seen much of a slowdown in demand. We are predominantly positioned in the premium and mid-premium segments, and demand in these categories has remained resilient. The festive season is still progressing, and the final few days will be important in determining the overall sales performance,” said Prasad.
While rural consumption has remained resilient so far, CFOs said the outlook could become more challenging as harvesting begins, particularly in eastern and central India, where untimely rains have affected the agricultural cycle.
“Rural consumption has not slowed down yet, but it is likely to face some pressure in the coming months as harvesting begins. There have been untimely rains, and eastern and central parts of India are experiencing heavy rainfall at present. This is a particularly difficult time for crops and could create problems in the months ahead,” Agarwal said said.
However, an early onset of winter could provide some support to agricultural activity, he said, adding that the weather could aid Rabi crop sowing over the next fortnight to a month.
Urban consumption, meanwhile, is showing a mixed trend, with demand varying significantly across categories and income segments.
“There is no single consumption trend in the urban market either. If you look at the automobile sector tractor sales and four-wheeler sales are also strong. Two-wheelers, in particular, are an indicator of consumption among lower-income segments. Their sales have been picking up since last year, and this year has been a record year for automobiles,” Agarwal said.
Premium offerings continue to rise
Meanwhile, amid a high inflation cycle, the premiumiation trend has continued to play out with mid to high segment brands reporting higher average selling prices and more demand for premium products.
“We have not seen any trend of consumers moving towards lower-priced products or compromising on the premiumisation of their purchases. In fact, our average selling prices are increasing, and our product mix has also improved towards the premium end. Even in the second quarter, our wool offerings sold much better. So, we are not seeing the kind of downtrading that may be visible in some other consumer categories,” Prasad said.
Agarwal added that there is no negative sentiment in the market. The market continues to grow, although the growth may not always meet expectations. “Growth is still there. I may have expected 20% growth and ended up seeing 15%, but that does not mean the market is weak,” he said.
