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Emami, HUL, ITC: Is early monsoon good news for FMCG stocks? Analysts weigh

The early arrival of monsoon in India this year, as per the forecasts by the India Meteorological Department (IMD), may have a mixed impact on fast-moving consumer goods (FMCG) companies, believe analysts. Monsoon hit Kerala on Saturday, May 24, 2025, marking the earliest arrival over the Indian mainland since 2009, IMD announced. Further, it has advanced in Karnataka, Goa, parts of Maharashtra, parts of west-central and north Bay of Bengal, and some parts of Mizoram, Manipur, and Nagaland within 24 hours, a record advancement. This, analysts said, could be beneficial to agri-related and/or staple-focussed FMCG companies, while it may hurt those FMCG players that are more skewed towards summer portfolios. How will early monsoon affect FMCG companies? Normally, the summer months from April to June drive strong demand for summer-centric products such as cold beverages, ice creams, talcum powders, and others. On the other hand, agri-related segments look forward to good monsoons as it is vital for better yields, and stronger harvests. FMCG companies closely monitor the monsoon as it has a direct impact on rural demand, raw material costs, and overall sales performance. "The early onset of the monsoon could affect companies with summer-centric portfolios, though it will be limited to the current quarter only. Over the medium-term, they should be able to make it up in the other categories," said Ajay Thakur, lead analyst - consumer staples, Anand Rathi Shares and Stock Brokers. Emami and Zydus Wellness are among the few companies that could be impacted more by the early monsoon, according to Thakur. Emami's summer-linked products include Dermicool Prickly Heat Powder with a 14 per cent market share by volume, and Navratna Cool Talc with 62.8 per cent market share by volume, according to its 2023-2024 annual report. Zydus Wellness' summer portfolio, meanwhile, includes products such as Nycil Prickly Heat Powder (35 per cent market share) and Glucon D (59.5 per cent market share). On the contrary, an early and stronger-than-usual monsoon could help improve the sowing of Kharif crops, raise reservoir levels, and boost rural demand. "This will help FMCG companies improve volumes in rural areas (which has been flat for many quarters)," said Amit Agarwal, senior vice president - fundamental research, Kotak Securities. That said, reports suggest that India's monsoon rains have lost momentum after covering western regions ahead of schedule, and their arrival in northern and central states could be delayed, extending a heatwave in the grain-growing plains. What's ahead for FMCG companies? Ajay Thakur of Anand Rathi Stock Brokers expects urban demand to recover in Q2FY26 and in the second half of FY26 on the back of good monsoon and government initiatives in terms of consumption boost coming into play. He recommends buying Emami and Zydus Wellness at current levels from a long-term perspective as valuations remain attractive and earnings growth is reasonably good for both. So far in 2025, the Nifty FMCG has gained 0.05 per cent as against Nifty50's rise of 5.2 per cent. According to market research firm NielsenIQ, demand for FMCG in rural India stood at 8.4 per cent in the March quarter, compared to 9.2 per cent in October-December of 2024. Urban demand growth moderated to 2.6 per cent, compared to 4.2 per cent in the October-December quarter. "We expect urban demand to start showing better traction from Q2 onwards, or more towards H2 onwards," said Thakur. That apart, the government's support to improve consumption, driven by increasing income threshold to claim tax rebates as announced during the Union Budget for 2025-26, aids long-term growth outlook.