Trend

Is there more downside to consumer staple stocks?

Facing sluggish volume growth due to slowdown in rural consumption, FMCG companies reported muted numbers in Q4FY19

|
Published 2 years ago on Jul 13, 2019 3 minutes Read

Pankaj Tibrewal, Senior VP and Equity Fund Manager, Kotak Mutual Fund

The FMCG sector is witnessing a slowdown. Volume growth slowed from 8% in 3QFY19, to 6% in 4QFY19 and the Street is factoring in 4-5% in 1QFY20. Price growth is also subdued at 2-3% due to low inflation. Overall, revenue growth is expected to be in high single digits in first quarter of FY20 against FY20 estimates of 10-12%. Revenue growth before 4QFY19 was driven by GST rate cuts – in November 2017 was when the rate cuts happened and so the tailwind lasted till Dec 2018.

The pattern of the slowdown seems to be acute as per companies and channel checks – since Nov 2018 every month incrementally has been worse and the slo

unsub

You don’t want to be left behind. Do you?

Our work is exclusively for discerning readers. To read our edgy stories and access our archives, you’ve to subscribe