FMCG stocks in focus: Dabur, Marico, Tata Consumer shares slip up to 4% despite stable Q4 numbers; know what is triggering correction!

Fast-moving consumer goods (FMCG) companies’ stocks such as Marico, Dabur, and Tata Consumer Products declined up to 4 per cent after the companies announced muted FY22 March quarter earnings on the sequential basis. 

According to the market analyst and TradeSwift Director Sandeep Jain, “These stocks are reacting to margin pressure that occurred sequentially due to high raw material costs, however, the results of each of these companies have been either stable or in-line with estimates year-on-year (YoY).” 

The analyst also blamed the overall sell-off in the market for the declines in these defensive stocks. 

Marico has reported a resilient performance on both growth and margin fronts YoY and valuations are also in favor, YES Securities said while maintaining a Buy rating with a target price of Rs 603 per share, which implies a 16 per cent upside from Thursday’s closing. 

“Revenue 5 per cent growth in domestic business with 1 per cent volume growth, 12 per cent CC growth in international business driving 7.4 per cent consolidated revenue growth 2-year CAGR (Compound annual growth rate) of 20 per cent. EBIDTA margin came in at 16 per cent.” 

On Dabur, YES Securities said that inflation‐led demand slowdown impacts growth momentum, though it maintained a Buy rating with a target of Rs 609 per share (15 per cent upside) on reasonable valuations and decent growth outlook 

“While volume growth has normalized in the last two quarters with 2 per cent each given a high base, 2-yr revenue CAGR of 16%/12% in Q4FY22/FY22 indicates Dabur’s portfolio strength and share gains. Key negatives were category decline in toothpaste and hair oil driving muted growth.” Yes Securities said. 

Growth has tapered off from a high base but stable growth and margin outlook is seen despite aggressive investment plans, YES Securities said on Tata Consumers maintaining an ADD rating with a price target of Rs 847 per share, which implies an upside of over 9 per cent.
“Foods business grew strongly at 19% despite a high base led by Sampann and premium salts with margins impacted by inflation and higher investments in new businesses. Tata Coffee grew 7% led by plantations and Vietnam business,” it said.