For instance, for Marico, Dabur, ITC, Emami, and Hindustan Unilever, essential products account for up to 35 per cent of their top line, according to analyst estimates. Nestlé and Britannia, though, come purely under packaged foods, and hence the impact may be lower.
A few like Dabur
have also informed about the suspension of production of non-essential items till March 31 (may get extended).
Besides, even for essentials, organised players could face demand pressure as consumers may shift to lower-priced products amid the risk to income, say analysts. Income risk has resulted in fears of delayed demand recovery.
A key positive is that raw material prices have fallen, which could aid margins. Given the government's financial package for farmers and the poor, some push to sales is also expected for the companies mentioned above as rural India accounts for 30-50 per cent of their top line. However, it is unlikely to be enough to cushion the overall pressure on top line.
The surge in FMCG stocks
on Thursday, and their outperformance vis-à-vis the Nifty over the past 10 sessions, might now be questioned. Moreover, valuations are still not cheap as the Nifty FMCG
index is trading at an over 100 per cent premium to the Nifty.