While the four largest listed paint companies have seen marginal negative returns, the S&P BSE Fast Moving Consumer Goods (FMCG) and the National Stock Exchange Nifty FMCG indices have delivered a solid 16 per cent return during the same period.
Initially, volume growth and reduced costs bolstered the sector s sentiment, but brokerages have grown cautious due to increased competitive pressures.
Brokerages lowered their earnings estimates following muted results in Q1FY24.
While analysts remain optimistic about the stock s medium-term prospects, they highlight near-term concerns stemming from lower realisations due to changes in the product mix and margin pressures resulting from new plane additions.
After underperforming its peers in the consumer space in 2022-23, and experiencing a mixed bag in the 2023-24 (FY24) April-June quarter (first quarter, or Q1), brokerages are positive about the medium-term outlook for liquor stocks.
Higher raw material costs, concerns regarding increased duties, regulatory changes, and competitive pressures weighed on performance returns in the past quarters.
Analysts believe that the sector could experience a reversal of fortunes due to better demand and margin improvements.
P&G Hygiene and Healthcare s June quarter numbers were better than Street estimates, led by strong sales and robust margins.
The company, which owns leading consumer brands like Whisper, Vicks and Old Spice, posted a 12.6 per cent year-on-year (Y-o-Y) growth in sales at Rs 852.5 crore during the quarter.
The double digit sales growth, led by expansion of its distribution reach, reverses a sluggish sales graph with three of the last four quarters reporting a fall in sales.