Go underweight in FMCG space: Prabodh Agrawal

In a chat with ET Now, Prabodh Agrawal, President & Head-Research, IIFL shares his views on the FMCG sector.

ET Now: Some of the FMCG earnings have been quite disappointing and especially the big boys, likes Unilever, ITC and Colgate wherein the volumes have come in lower. So is it time to sell these names or accumulate them on dips?

Prabodh Agrawal: The FMCG sector has performed very well over the last three to four years. The entire sector has been re-rated in a cyclical downturn. When other sectors were not doing well, the FMCG companies have done exceptionally well but now we are clearly seeing slowdown in the consumption.

Their volume growth is slowing down across all companies and that is showing in the bottom line growth as well, which is weakening. So, as the pace of growth slows down, clearly the valuations may be under threat. We believe that FMCG companies look very pricy at this point of time and given the volume and bottom line growth slowdown, there is a chance of a de-rating and we would advise investors to go underweight and reduce their exposure to the sector.


Most of the FMCG companies are showing stronger growth in the rural segment rather than the urban segment. We like select FMCG companies, we like Emami, we like Marico, we like GCPL now these are not cheap but I guess in the FMCG segment if investor needs to hold some these are the stocks which would do relatively well compared to their peers.