Rural outpacing Urban: A key theme emerging from Q4 earnings; check details

Q4 earnings season has started on a good footing with larger companies reporting earnings on expected lines, barring a few exceptions. Till now, Major IT, Bank, FMCG and consumer-oriented companies have reported their Q4 earnings. The broader picture looks stable with high moderate growth in the bottom line. Category-wise, the consumption basket showed mixed results with Hindustan Unilever, Maruti Suzuki, and Nestle India reporting subdued earnings. In the case of Maruti Suzuki, the export market also cushioned the overall earnings and witnessed a 17% jump in total exports.

However, all the major consumer-oriented companies reported one thing in common, and that is better performance of the rural category vs the urban. The striking difference between the rural and urban primarily can be attributed to lower aggregate demand in urban areas, driven by multiple factors like lower propensity to consume, high debt component, high inflation and more.

On the other hand, the rural areas witnessed good crop cultivation, favourable agriculture policies ensuring good yield on crops over the past few years and more. According to a recent report by NeilsonIQ, sales volume in rural areas jumped by 9.9% in the December quarter, double that of urban areas at 5%.

Hindustan Unilever

Nestle India

Maruti Suzuki

Ceat

India’s leading tyre manufacturer reported a strong set of numbers in Q4FY25. The total revenue for the quarter jumped 14.8% YoY to ₹3,414 crore. The company CEO and Managing Director said in an interview with CNBC TV18,” Rural areas are doing much better and see a clear 4-5% delta in the incremental growth in rural for us”. The company’s 53% of the demand comes from the replacement market, for which they have over 59,000 touchpoints, which help in addressing this demand. The company expects the growth to continue further.

There are plenty more consumer durable, FMCG and consumer-oriented companies that are yet to report their Q4 earnings. However, market experts and analysts expect a similar trend from them as well. The demand from rural is also expected to remain strong in the coming quarters due to strong monsoon forecast, and urban demand is expected to improve further due to lower interest rates and tax cuts benefits.