Investors will have to await sustained recovery before considering Dabur

The fast-moving consumer goods (FMCG) sector is likely to report muted results in the fourth quarter of 2024-25 (Q4FY25) due to weakness in urban consumption.

- DEVANGSHU DATTA

The weakness may persist through the first half of 2025-26 (H1FY26).

Rural growth, which contributes around a third of total consumption for the FMCG sector, is stable, but not accelerating. Inflation in commodities like palm oil, tea, and coffee is also likely to drag down margins.

Hence, analysts are reducing earnings estimates to low single digits across the sector, with a few exceptions. The FMCG sector's forward price-to-earnings ratio (P/E) is near its historical mean, with investors waiting for demand recovery or lower raw material prices. If there is no recovery through H1FY26, we may see valuations drop below historical means.