New Delhi, India — Indian consumer firms are expected to experience a significant boost in their profit margins in the third quarter of 2025, as a result of declining input costs, according to a recent analysis by Nomura. The investment bank’s report highlights a favorable shift in the economic landscape that could enhance profitability for a sector that has faced challenges in recent years.

This forecast is particularly relevant as it comes at a time when many companies are grappling with rising operational costs and shifting consumer preferences. As inflationary pressures ease, businesses in the consumer sector are positioned to benefit from improved margins, which could lead to increased investments and expansion opportunities.

Nomura’s analysis indicates that the easing of input costs, particularly in raw materials and logistics, is a key driver of this anticipated margin growth. The firm projects that companies like Hindustan Unilever and ITC will see their operating margins improve by 100 to 150 basis points in the upcoming quarter. This is a significant turnaround from previous quarters, where margins were squeezed due to high commodity prices and supply chain disruptions.

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In the broader context, the Indian consumer goods market has been navigating a complex landscape. According to the Ministry of Commerce and Industry, the sector has shown resilience, with a growth rate of 8.5% in the last fiscal year. However, the challenges posed by inflation and changing consumer behavior have necessitated strategic adjustments from companies.

Nomura’s analysis indicates that the easing of input costs, particularly in raw materials and logistics, is a key driver of this anticipated margin growth.

As input costs begin to soften, companies are likely to pass on some of these savings to consumers, potentially stimulating demand. This could create a positive feedback loop, where increased consumer spending further enhances company revenues and margins. Analysts suggest that this trend could also encourage firms to invest in innovation and sustainability initiatives, as they regain financial flexibility.

Moreover, the anticipated margin growth comes at a crucial time for the Indian economy, which is projected to grow at 6.5% in 2025 according to the International Monetary Fund. As consumer confidence rebounds, driven by stable prices and improved employment rates, the consumer sector is poised to play a pivotal role in sustaining economic momentum.

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However, not all companies may benefit equally from this trend. Smaller firms, which often lack the pricing power of larger competitors, may struggle to maintain profitability even as input costs decline. This disparity could lead to further consolidation within the industry, as weaker players are acquired or forced to exit the market.

Looking ahead, the ability of consumer firms to capitalize on this margin growth will depend on several factors, including their agility in responding to market changes and their commitment to innovation. As the landscape evolves, companies that prioritize consumer engagement and adapt to shifting preferences will likely emerge as leaders.

Moreover, the anticipated margin growth comes at a crucial time for the Indian economy, which is projected to grow at 6.5% in 2025 according to the International Monetary Fund.

As we move into 2026, the question remains: how will consumer firms leverage this opportunity to not only recover but also redefine their market strategies in an increasingly competitive environment? The next few quarters will be critical in determining whether this margin growth translates into sustainable long-term success.

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