MUMBAI: Fast moving consumer goods (FMCG) stocks are staging a recovery after months of underperformance, with the Nifty FMCG index rising 6% over the past month as early signs of stabilizing consumption and selective earnings upgrades revive investor interest in the sector.
The rebound, however, remains uneven. While Bajaj Consumer Care Ltd (-3%), CCL Products (India) Ltd (-9.7%), Marico Ltd (-0.07%) and Nestlé India Ltd (-0.8%) are trading close to their lifetime highs, larger staples such as Britannia Industries (-16.4%), Hindustan Unilever Ltd (-22.7%) and Dabur India Ltd (-29.6%) remain well below peak levels.
Recent management commentary across companies points to early signs of improving consumption trends, prompting investors to revisit the sector for its earnings visibility, defensive positioning and steady compounding potential, said market participants.
Marico Ltd management expects double-digit revenue growth in FY27, driven by high single-digit volume growth in the domestic business, while the international business is projected to grow in the mid-teens on a constant currency basis. India business revenue rose 21% year-on-year in the March quarter (Q4FY26), while international revenue increased 25%.
Dabur India Ltd has raised its FY27 revenue growth guidance from high single-digit growth to low double-digit growth, driven by recovery in volumes, demand acceleration following GST cuts, price hikes of around 4% already taken, and premiumization across the home and personal care and beverages segments, pointed out a Nuvama Institutional Equities report dated 7 May.
The brokerage also noted that Dabur remains committed to protecting margins despite continued pressure from high input costs.
According to Amit Purohit, vice president at Elara Capital, FMCG demand is likely to remain resilient and companies should be able to pass on input cost inflation given the essential nature of these categories. However, he cautioned that the full impact of recent price hikes on consumption will become clearer only after Q1FY27.
Ajay Thakur, research analyst at Anand Rathi Institutional Equities, said companies had spent the last few quarters banking on a recovery in consumption demand, but urban weakness delayed the rebound. He believes the cut in goods and services tax (GST) rates are now beginning to support demand.
He added that recent volume and revenue trends from staples companies such as Nestle and Marico, along with calibrated price hikes taken by several players, point to early signs of demand improvement, a potential inflection point for the sector.
In 2026 so far, performance across FMCG stocks has been sharply divergent. Bajaj Consumer Care (111%), CCL Products (India) Ltd (16.5%), Nestle (15%), Marico (12.2%) and Tata Consumer Products Ltd (6.9%) have seen strong gains, while larger staples such as ITC (-24%), Godrej Consumer Products (-17%), Emami (-15.7%), Hindustan Unilever Ltd (-0.4%), Britannia Industries Ltd (-10.3%), Dabur India (-6%) have lagged.
According to Purohit, this divergence is largely linked to stronger sales growth at Nestle, Bajaj Consumer and CCL Products, driven by company-specific initiatives, GST benefits and coffee inflation. Other companies, however, are yet to see a meaningful improvement in sales trends, he said, adding that price hikes could support growth at Hindustan Unilever and Dabur.
Even as demand indicators improve, rising input costs remain a key risk for the sector, forcing companies to balance price hikes with volume growth while protecting margins.
Dabur has announced price hikes of around 4% to counter raw material inflation, while Nuvama Institutional Equities said input cost inflation of 8-10% versus calibrated price hikes of 2-5% could keep near-term margins under pressure for Hindustan Unilever Ltd.
Path ahead
Purohit expects most FMCG stocks to deliver 10-12% upside from current levels if demand resilience sustains.
According to Thakur of Anand Rathi, “Valuations of some companies are hovering near decade-low levels,” which makes them “the most attractive they have been in the past five to ten years.”
Stocks such as CCL Products are currently trading at 38.67 times earnings, below their 10-year average multiple of 47.98 times. Dabur, too, is trading at 45.64 times versus its long-term average of 63.94 times, while Emami is valued at 25.12 times compared with its historical average PE of 47.56 times.
Godrej Consumer Products currently trades at 57.31 times earnings, lower than its 10-year average multiple of 85.63 times. Similarly, HUL is at 35.74 times against a long-term average of 59.96 times, while ITC is trading at 11 times versus its historical average of 25.53 times.
Thakur also noted that the earnings season is still incomplete, with nearly 40-50% of companies yet to report results, meaning the broader trend is yet to fully emerge.