According to latest reports from Business Standard, Dabur India Ltd has dropped to a low of ₹368 in September, testing the Covid-19 nadir of ₹386. The stock has been among the major underperformers in the FMCG sector, with the Nifty FMCG index down nearly 18 per cent as against a 6.5 per cent fall in the Nifty 50. As per ACE Equity data, Dabur India has tanked in the range of 23-29 per cent, along with other major FMCG companies including Godrej Consumer Products, Emami, Patanjali Foods, United Breweries and Dabur. The broader FMCG sector has been significantly impacted, with ITC experiencing a 34 per cent decline and serving as a major drag on the FMCG index.
According to reports from The Economic Times, Dabur India Ltd has demonstrated strong technical recovery after testing the ₹350-360 levels earlier in September. The stock has successfully reclaimed its 20-day moving average (20-DMA) on daily charts, indicating that bulls are attempting a comeback. This technical development suggests the stock may be showing signs of bottoming out after its significant decline from previous highs. The recovery has been supported by multiple technical indicators including a Supertrend buy signal and positive EMA crossover, with analysts citing a channel breakout, volume confirmation, and MACD confirmation as key factors supporting the improving momentum.
The GST implementation has created a mixed impact on the FMCG sector, with companies initially reporting volume improvements after the tax changes. According to The Times of India, Nestlé India, Hindustan Unilever, Marico and Dabur were among companies that reported signs of improving volume growth. However, the benefits have not been uniform across categories, as consumers initially directed their savings towards bigger-ticket purchases such as cars and consumer durables rather than everyday products like biscuits, soaps and shampoos. The GST cuts appear to have unlocked some pent-up demand and encouraged consumers to move up the value chain in several discretionary categories.
As reported by Business Standard, analysts flag that over the years the market has closed the valuation gap built for double-digit growth in FMCG stocks, as earnings remained muted owing to tepid volume growth and high inflation. The current underperformance reflects these fundamental challenges, with companies facing short-term headwinds from input price increases despite full refund of input tax credit. Industry experts acknowledge that while the long-term outlook remains positive, there are short-term challenges, with companies expecting easing inflation and lower GST rates to shift growth from price-led gains towards volumes. The consumption story remains at an interesting juncture as GST changes continue to influence consumer behavior and shift demand toward branded products.
