InvestorQ : How big is the pressure on Indian FMCG stocks due to the input cost spike? I am talking of stocks like HUL, Asian Paints and Nestle?
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How big is the pressure on Indian FMCG stocks due to the input cost spike? I am talking of stocks like HUL, Asian Paints and Nestle?

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Juvina Maggie answered.
2 months ago
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There is mounting pressure on consumer-focused FMCG and durables companies. Most of the companies are finding it hard to offset soaring commodity inflation via price hikes. That did help for some time but it has reached a stage where they expect demand to be negatively impacted if prices are hiked any more. The pressure is evident in FMCG company numbers like in the case of HUL, Nestle and Asian Paints, where numbers are announced.

Apart from input cost spikes, there are also signals of slowing rural demand. For example, the growth in rural demand for HUL was just 2.5% in the Sep-21 quarter compared to 12.5% in Jun-Jul period. If you look at the specific case of Nestle, the raw material costs rose 20.4% on a month-on-month basis, leading to a 11% spike in total costs. Asian Paints has taken deep cuts on account of the spike in crude prices.

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