FMCG stocks lose sheen, valuation premium declines to 11-year low

In the last 12 months, there has been derating of FMCG stocks on the bourses, against a P/E expansion in the broader market

The fast-moving consumer goods (FMCG) stocks have begun to lose some of their sheen, as volume growth slows in the industry. There has been sharp decline in the valuation premium that FMCG stocks enjoyed over the broader market, even as investors fret over the industry’s earnings trajectory, given a broader slowdown in consumer demand.

The price-to-earnings (P/E) premium of FMCG stocks over the Nifty50 index is now down to an 11-year low of 16.5x, from 22.6x a year ago. In the last 12 months, there has been derating of FMCG stocks on the bourses, against a P/E expansion in the