HUL, ITC, Dabur, and others: Here are 3 key factors driving the FMCG stocks, and should you buy or sell?

Mint

7 hours ago

Stock Market Today: HUL, ITC, Dabur, and other consumer stocks have been in focus recently . The share price of Hindustan Unilever Ltd., or HUL, and Godrej Consumer Products Limited are up almost 6.5% in the ongoing week. Dabur India and Marico share prices are also up 4-5%.
The key factors driving FMCG stocks include demand improvement to pick up pace and a good monsoon, which is likely to be positive and supportive for the rural consumption too.
The expectation of declining raw material prices and some calculated price hikes is also likely to be positive for the margins that remained subdued in Q1, though the recovery remains watched for.
Over the past three years, consumption has been hit by high inflation, rising interest rates, and a lack of government programs. The recent initiatives, such as the attempts at nationalization of the Goods and Services Tax, declining interest rates, and cooling inflation, are expected to be favorable, as per analysts.
The Q1 results season too has been encouraging; the earnings recovery in coming quarters will be keenly eyed.
The demand recovery that was seen in the April to June quarter continues. Based on our recent interactions with distributors and dealers, analysts feel that demand in the mass urban space improved, though marginally, in July '25.
As per Antiques Stock Broking, Nestle distributors reported a minor rebound in the milk and nutrition business, with strong growth in beverages, chocolates, and instant noodles.
ITC witnessed a healthy cigarette consumption rate.
Antique analysts believe Hindustan Unilever (HUL) is experiencing a sequential recovery with broad traction across categories.
Marico's price increase in Parachute had a minor impact on product sales in July but is expected to normalize in the future, as per analysts. They believe Godrej Consumer Products (GCPL) saw a healthy increase in household insecticide use due to mosquito infestation.
Antique Stock Broking prefers Godrej Consumer Products, or GCPL, and Marico in the consumer staples.
The government aims to revive consumption, and the analysts say that the government has been making some efforts.
We believe that Prime Minister Narendra Modi's announcement to rationalize GST rates and simplify the rate structure on August 15th, 2025, will boost consumption. said analysts at Motilal Oswal Financial Services,
Rural markets' performance as per MOFSL has been an outlier for the last 12 months after witnessing a tepid performance during 2022-2023.
Price increases helped drive growth in Q1 FY126 as rural communities remained resilient, said analysts. Axis Securities pointed out that the urban weakness persists, but recovery is on the horizon. Higher raw material prices have put pressure on gross margins in staple companies, affecting overall performance, said Axis Securities.
However, Axis Securities added that in a volatile, uncertain, complex, and ambiguous (VUCA) environment, the FMCG sector stands out for delivering best-in-class return ratios such as ROCE, ROE, and dividend yield, ensuring long-term capital protection. Their picks include Varun Beverages and DOMS Industries.
We noted a relatively better revenue print and commentary from staple companies in 1QFY26, said Motilal Oswal Financial Services. They continue to like HUL, GCPL, and Marico in their staple universe.
Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, not Mint. We advise investors to check with certified experts before making any investment decisions.