Britannia, Tata Consumer to HUL: 14 Nifty FMCG stocks rally up to 30% from March lows. What’s behind the surge? | Stock Market News

FMCG stocks today: Shares of Godrej Consumer Products, Tata Consumer Products, Britannia Industries, and other FMCG stocks have maintained their stellar run for the second consecutive month in April, building on notable gains recorded in March.

For instance, the Godrej Consumer Products share price has gained 9.25% so far in April and risen 30% from its March lows to trade at ₹1,266 apiece, while Tata Consumer’s share price has also jumped 15.35% in the current month and rallied 24% from March lows.

Britannia Industries’ share price has also surged 28% from its March lows, while other stocks such as Marico, United Spirits, Patanjali Foods, Nestle India, Varun Beverages, Emami, Colgate-Palmolive, ITC, United Breweries, Radico Khaitan, and Hindustan Unilever have rallied up to 24% from their March lows.

The strong reversal in these stocks has also propelled the Nifty FMCG index to gain 6% so far in April and 13% from March lows. Meanwhile, overseas investors slowed down their selling spree, offloading ₹2,789 crore worth of Fast-Moving Consumer Goods (FMCG) stocks in March, compared to ₹6,991 crore worth of stocks sold in February, according to NSDL data.

What’s powering the sharp comeback in FMCG stocks?

Investor sentiment has turned favourable towards more domestically focused stocks amid heightening global trade tensions, along with improving liquidity conditions, multiple rate cuts by the RBI, and income stimulus measures, which analysts believe could potentially boost domestic consumption in the current fiscal year.

In addition, reasonable valuations have attracted value buyers to step in, resulting in strong gains for FMCG stocks on Dalal Street. The consumer goods stocks, known for their defensive nature, witnessed heavy selling pressure between October and February amid rising input costs, falling volumes, and weak demand from urban consumers, but analysts expect these challenges to recede in FY26E.

In the Union Budget 2025-2026, the government has shifted its focus from capex to consumption for the first time in a decade, increasing the income tax exemption limit to ₹12 lakh in the Union Budget 2025. In line with the budget, the RBI, under the new governor, cut the repo rate for the two consecutive times and been taking various measures such as easing LCR requirements, aiming to boost consumption — a major driver of the Indian economy, prompting analysts to turn bullish on consumer goods makers.

UBS projects the rally to maintain its momentum

In its latest note, global brokerage firm UBS, has upgraded ratings on select group of stocks in the consumer sector—including Colgate, Trent, HUL and ITC— and retained its bullish view on other stocks such as Avenue Supermarts and GCPL as it believes the sector is poised for a strong rebound in the current fiscal year.

The FMCG sector’s share price weakness has been exacerbated by cyclical headwinds to demand and margins in recent years, but UBS expects these to recede in FY26E. As per the brokerage, the recovery is expected to be driven by earnings growth, attractive valuations, and the resolution of structural challenges.

The brokerage expects earnings growth to turn around in FY26 and continue recovering in FY27 as the base normalizes and demand gradually picks up. Compared with 1% median earnings growth in FY25, UBS forecasts 13% growth in FY26 and an earnings CAGR of 12.8% between FY25 and FY27.

According to the brokerage, weak demand and input cost pressures weighing on margins have already been priced in, given the sharp correction in the sector since the October 2024 peak. Valuations are now back in a reasonable range, with any earnings rebound potentially serving as a key catalyst.

The brokerage recent discussions with industry experts indicate rural consumer sentiment is strong, and the demand outlook is promising. It believes urban mass market demand is recovering, with inflation falling from around 7% in FY23 to 3% as of March 2025, while premium segments continue to perform well in urban markets.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.