Fast moving consumer goods (FMCG) companies experienced significant pressure with most frontline stocks including Hindustan Unilever (HUL), ITC, Dabur India, Emami, Godrej Consumer Products and Procter & Gamble Hygiene and Health Care hitting respective 52-week lows on Monday's intra-day trading. According to reports from Business Standard, these stocks were down up to 3 per cent, compared to a 0.39 per cent decline in the BSE Sensex. The BSE FMCG index failed to participate in the market's recovery and traded near its four-month lows due to broad-based sectoral weakness.
The FMCG sector has significantly underperformed the broader market in 2026, with the BSE FMCG index plunging 10.3 per cent compared to a 9.6 per cent decline in the benchmark index. As reported by Business Standard, in the past month alone, the BSE FMCG index underperformed the market by falling 3.3 per cent, compared to a 1.5 per cent fall in the BSE Sensex. Share prices of ITC, HUL, Dabur India, Emami and Godrej Consumer Products plunged in the range of 14 per cent to 30 per cent during this period.
According to Nomura analysis, raw material prices have remained largely stable month-on-month in August, excluding sugar, copra and Brent crude, following a sharp increase in June. However, cumulatively for 2QFYTD27, most raw material prices remain higher quarter-on-quarter and year-on-year, which could lead to further product price hikes and pressure near-term margins in 2QFY27. Sugar prices have risen 16% month-on-month and 27% year-on-year amid tight near-term availability and heightened festive-season demand, though recent government measures have started easing prices which are now 1.5% below their peak. Copra prices have risen 14% month-on-month and 10% quarter-on-quarter, while Brent crude and HDPE prices have increased 10% and 3% month-on-month respectively, and are up 26% and 42% year-on-year amid geopolitical uncertainties.
In the June 2026 quarter, HUL's gross margin remained under pressure, contracting 80 basis points year-on-year to 49.5 per cent (versus estimated 50.5 per cent, 50.3 per cent in Q4FY26). According to Motilal Oswal Financial Services, HUL's EBITDA margin contracted 30 basis points year-on-year to 22.8 per cent against an estimate of 23.2 per cent. The company took a 5 per cent cumulative price hike in Q1FY27 and indicated it will implement further calibrated pricing actions if commodity inflation persists.
According to Nomura analysis, consumer companies have taken price hikes in 1QFY27, which will likely optically improve sales growth but are lower than inflation, likely to pressure near-term (2QFY27) margins year-on-year and quarter-on-quarter. However, with the full impact of price hikes kicking in, margins are expected to sequentially improve from 3QFY27 onwards. The brokerage expects 2QFY27 margins to remain under pressure, though price hikes are likely to support sequential improvement from 3QFY27 onwards. Palm oil prices remain elevated by 20% year-on-year in rupee terms, potentially affecting margins for multiple FMCG companies including Godrej Consumer Products, Hindustan Unilever, Nestlé India and Britannia, while liquid paraffin prices remain 41% higher year-on-year, impacting hair oil players such as Dabur and Marico.
