BSE FMCG index nears 52-week low; Dabur, Godrej Consumer slips up to 9%

Shares of fast moving consumer goods (FMCG) companies continued to reel under pressure with most of the frontline stocks from the sector trading at their respective 52-week lows as operating environment in the near-term is likely to remain challenging due to rising commodity inflation.

Godrej Consumer Products plunged 9 per cent, while Emami and Dabur India slipped 7 per cent and 6 per cent, respectively, on the BSE in Monday’s intra-day trade. Britannia Industries, Procter & Gamble Hygiene & Health Care, CCL Products, Marico and Hindustan Unilever (HUL) were down between 4 per cent and 5 per cent on the BSE.

The S&P BSE FMCG index hit a 10-month low of 12,355, down 3 per cent in intra-day trade. It was trading close to its 52-week low of 12,091 hit on March 15, 2021. In the past one month, the index has fallen 9 per cent in line with the benchmark S&P BSE Sensex. Including HUL, Britannia Industries, Dabur India and Gillette India, total eight stocks from the index hit their respective 52-week lows today.

FMCG market growth is soft with rural volume pressure more acute than that of urban markets. The near-term operating environment remains challenging, with higher inflation expected sequentially.

Among the individual stocks, HUL hit a fresh 52-week low of Rs 1,942, down 4 per cent in intra-day trade today. In the past two weeks, the stock tanked 15 per cent, as compared to a 9 per cent decline in the S&P BSE Sensex.

Analysts at HDFC Securities said near-term demand outlook for HUL continues to be a concern, with rural India witnessing an inflation-led slowdown. Elevated input costs, besides slowing down growth, continued to impact the gross margin, which contracted by 186bps year-on-year in December quarter (Q3FY22). Given the inflationary environment, the brokerage firm expects the gross margin pressure to continue in H1FY23 despite staggered price hikes. Business Standard