Godrej Consumer Products Down 10%; FMCG Stocks in Red

Shares of FMCG stocks slumped heavily in today’s trading session wherein Nifty FMCG index was down 2%. While Godrej Consumer Products was down 9.3%, Hindustan Unilever slipped by over 4%. Shares of Dabur, Marico, Colgate Palmolive lost their sheen by 2%.

Godrej Consumer Product came down at a day’s low of Rs 1,120 apiece. The stock witnessed heavy selling pressure and the company is expecting a ‘flattish’ volume growth and a mid-single digit in domestic sales during the December quarter.

As per an exchange filing, the company is expecting a ‘flattish’ growth on account of unseasonal rains, surge in soap prices, slump in sales of home insecticides (HI) segment.

However, the remaining segments are performing well and volumes are expected to grow in double digits, said Godrej Consumer Products.

“The demand conditions in India have been subdued for the past few months which is evident in the FMCG market growth,” it said.

Notably, an uptick in palm oil and derivatives prices on a year-on-year (YoY) basis by 20%-30% dampened the sales in the soap category.

Godrej Industries Group FMCG arm said, “To partly offset the cost increases we have taken price increases, reduced grammage of key packs and reduced various trade schemes.” The company is expecting the price to stabilise in the near future.

Delayed winters in the north and cyclones in south India affected the sales in HI segment, which is one-third of the company's standalone business. However, the management believes that such “exceptional situations in standalone business” are transitionary and not structural in nature.

The filing said, “Hence the management remains focused on navigating these near-term challenges while maintaining strategic investments for long-term growth as these negative trends are likely to persist for a few months.”