Unilever Indonesia de-rating underscores valuation risk to India FMCG

Currently, HUL trades at 58 times its estimated earnings for FY23. Nestle is the most expensive FMCG with 69x its FY23 P/E, while ITC is the cheapest at 17.5x

Fast moving consumer goods (FMCG) stocks in Indonesia have seen sharp de-rating in the past five years amid sluggish growth. Unilever Indonesia, the biggest consumer staples firm there, currently trades at 20 times one-year forward price-to-earnings (P/E) compared to 10-year average of 40 times.

While domestic FMCG companies don’t face challenges similar to their Indonesian peers, the sharp de-rating underscores the risk FMCG stocks face if growth expectations are not met.

“Indonesian staples stocks, which in the past have traded at similar valuations as Indian staples, are now trading at a large discount. Unilever Indonesia traded at a 25 per