Goldman Sachs Predicts Strong FMCG Earnings Growth in 2026, Names Top Stock Picks
Goldman Sachs forecasts India's FMCG sector entering its strongest earnings phase in years during 2026, driven by GST rate cuts from 18% to 5% on key categories, falling input costs across palm oil and crude, and favorable base effects from weak 2025 summer consumption. The brokerage's top picks include Godrej Consumer Products, Tata Consumer Products, Varun Beverages and Marico, combining macro tailwinds with stock-specific catalysts. Goldman Sachs believes the earnings downgrade cycle for staples is complete, with strong EPS growth ahead.
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Goldman Sachs expects India's fast-moving consumer goods sector to enter one of its strongest earnings phase in years, with 2026 bringing a rare combination of revenue and margin tailwinds. The brokerage anticipates meaningful acceleration in earnings growth as both toplines and margins improve across the sector.
Multiple Growth Drivers Converging
The investment bank identifies three key catalysts driving the optimistic outlook for 2026:
| Growth Driver | Details |
|---|---|
| GST Rate Cuts | Reduction from 18% to 5% on soaps, shampoos, biscuits, packaged drinking water, and coffee |
| Implementation Date | September 2025 |
| Full Benefit Timeline | December 2025 quarter onward |
| Input Cost Relief | Falling prices across palm oil, crude, tea, coffee, cocoa, and copra |
| Base Effect | Low comparison base after abnormally wet 2025 monsoon shortened summer consumption |
On the demand side, GST rate cuts and soft food inflation are positioned to lift mass-consumption categories including soaps, hair oil, shampoos and biscuits. The weak summer performance in 2025 has created a favorable base for beverages and other summer-linked products.
Preferred Stock Selections
Goldman Sachs has identified companies that benefit from both macro tailwinds and stock-specific catalysts:
| Company | Key Advantages |
|---|---|
| Godrej Consumer Products | Scaling high-growth categories with input cost benefits |
| Tata Consumer Products | Strong positioning in beneficiary categories |
| Varun Beverages | Expected strong revenue growth cycling weak 2025 summer |
| Marico | Combination of category growth and margin expansion |
Varun Beverages is particularly expected to see strong revenue growth as it cycles a weak 2025 summer in India, alongside margin improvement in its Africa operations through backward integration.
Earnings Downgrade Cycle Ending
The brokerage believes the worst of earnings cuts for staples is now complete. Several FMCG companies experienced noticeable earnings downgrades for the second half of fiscal 2025 and the first half of the current period as volume growth slowed and margins came under pressure. Ready-to-drink beverages and soaps were among categories particularly affected by the weak summer of 2025.
GST Impact and Market Dynamics
The GST cuts are expected to improve affordability, drive premiumization, boost price-point packs and shift market share from unbranded to branded players as price gaps narrow. The full benefit of these rate reductions will flow through from the December 2025 quarter onward.
Consumer Discretionary Outlook
While bullish on FMCG staples, Goldman Sachs remains cautious on parts of consumer discretionary, citing elevated valuations and intensifying competition in grocery retailing, paints and fashion. The brokerage's top pick in this space is Titan, which offers high visibility of over 20.00% earnings growth and currently trades toward the lower end of its sector valuation range.
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