FMCG stocks trip on high valuations; analysts see further correction

A key worry for consumer companies is rising input costs which is impacting profitability and overall earnings outlook

Usually, when markets fall, fast moving consumer goods (FMCG) stocks are seen as safe havens. However, this time around, FMCG stocks were among top losers as markets fell, mainly due to their pricey valuations. Being amongst the few attractive sectors, FMCG stocks had remained in the sweet spot. In just eight months ending August, the index had rallied over 19 per cent. Stocks such as Hindustan Unilever, Nestle, Britannia, among others, were trading above 50 times their respective FY20 estimated earnings before the recent correction, which now is down to 45-46 times, though still on the higher side. 

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