Decelerating sales growth a worry for FMCG, consumer spaces: Hemindra Hazari

In a chat with ET Now, market expert Hemindra Hazari shares his view on FMCG firms such as Asian Paints.

ET Now: Asian Paints is a good company, but the valuations are more like a no brainer avoid. What is your view?

Hemindra Hazari: A lot of the FII money has gone into all these quality names, which has inflated multiples.

As a result of which, analysts have all jacked up their projections to meet those valuations.

When you have such high multiples, I believe Asian Paints is about 37x FY16, there is no margin for error. What we are seeing is that the volume figures have really disappointed the Street. But I believe that this is the state of the Indian economy as a whole. When the economy is slowing down, you cannot expect even FMCG counters to report significantly high volume growth or meet tall expectations.

The decelerating sales growth is a worrying sign for the entire FMCG and consumer spaces. Volumes are extremely difficult to meet analysts’ expectations. I am sure that a lot of companies must be stuffing the stockists. They may be also piling up inventories to report such high volumes.

Hence, there is an issue here and people will take call that they do find things expensive.