FMCG stocks tumble: HUL, ITC, Marico drop up to 4% amid margin concerns
FMCG stocks dip sharply as Godrej Consumers margin warning sparks concerns. HUL, ITC, and Marico lead losses, with Nifty FMCG index down nearly 2 per cent amid inflationary pressures and slowing demand.
Fast-moving consumer goods (FMCG) stocks took a significant hit on December 9, with the Nifty FMCG index plunging 1,292 points (2.24 per cent) to 56,453 by mid-day trading. 14 of the 15 stocks in the index were in the red, reflecting a widespread sell-off after Godrej Consumer Products Limited (GCPL) warned of a challenging margin environment in its Q3 preview. Notable decliners included Marico (-4.36 per cent), HUL (-3.77 per cent), Tata Consumer (-3.40 per cent), and Britannia (-2 per cent). GCPL shares plunged 9.5 per cent to Rs 1,118 on the NSE, marking the steepest fall in the pack.
GCPL leads the fall
GCPL shares nosedived by over 9 per cent to Rs 1,118, marking the steepest decline in the FMCG pack. The company attributed the margin pressure to soaring palm oil and derivative prices, which surged between 20 and 30 per cent year-on-year, severely affecting its soaps business. GCPL also reported potential volume declines in key categories such as soaps and home insecticides.
GCPL’s preview projected a year-on-year decline in earnings before interest, taxes, depreciation, and amortisation (EBITDA) for Q3 FY25, despite domestic revenue growth. The company highlighted a significant 20-30 per cent increase in palm oil and derivative prices, impacting its soaps category, which contributes one-third of standalone revenue.
To combat rising costs, GCPL implemented price hikes and reduced soap sizes, which disrupted inventory levels in wholesale and household channels. The firm anticipates volume recovery once prices stabilize in upcoming quarters.
Investor outlook turns cautious
Brokerages like Jefferies noted that GCPL’s commentary has amplified concerns about the FMCG sector's slowdown, especially following weak Q2 GDP data that flagged declining urban consumption. While some signs of rural recovery are visible, urban demand—a key growth driver—remains sluggish.
FMCG heavyweights, including HUL, Britannia, and Nestle India, have borne the brunt of this sentiment shift. Experts suggest the sector might face headwinds until input costs stabilize and consumer demand strengthens.
With the broader consumption landscape under strain, FMCG stocks could remain under pressure in the near term, posing challenges for both investors and the economy at large.
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