Analysts not bullish on Dabur stock, but it may outperform as growth recovers

The fast-moving consumer goods (FMCG) sector has seen deratings due to weak earnings and April-June quarter of the 2025-26 (Q1FY26), the fourth consecutive quarter of muted earnings.

- DEVANGSHU DATTA

The average price-to-earnings (P/E) valuations for FMCG stocks are below the long-term mean.

Low taxes, liquidity easing, better monsoon, and fall in some raw material costs could lead to recovery.

Overall demand remained stressed in Q1FY26, but FMCG players have taken price hikes to manage inflationary pressures. Volume growth is likely to be moderate and similar to the quarter ended March 2025 (Q4FY25). Gross margin pressure is also expected to persist.

Management commentary indicates many companies hope for recovery in the July-August quarter (Q2) of FY26 and some in the second half of the ongoing financial year. In Q1FY26, unseasonal heavy rains may have dented summer specific demand for talcum powder, juices, ice creams, etc. Inflation in palm oil, tea, coffee, cocoa, wheat, and copra led to price hikes and gram-mage cuts. Advertising and promotion (A&P) spends are high due to competitive intensity. Palm oil, wheat and coffee have started softening on a quarter-on-quarter (QoQ) basis.