Rural slowdown, funding pull down FMCG stocks; quick recovery unlikely

Valuations do not fully capture weak liquidity, monsoon worries, and sluggish economic growth

The Page Industries stock was down over 10 per cent, its steepest fall in a decade, on muted volume growth and liquidity issues. The management in an investor call had highlighted pressures on the trade channel, which have resulted in 1 per cent volume growth for the March quarter.

Page joins other fast-moving consumer goods (FMCG) companies, Hindustan Unilever and Dabur, which have pointed out the impact of weak liquidity on overall volumes. The FMCG space could see further pressure if distributor funding and weak rural incomes do not improve.

This is reflected in the performance of the Nifty FMCG