Credit Suisse downgrades Britannia, Pidilite as FMCG faces worst slowdown in 15 yrs

Britannia was quoting at Rs 2,613.20, down Rs 80.30, or 2.98 percent and Pidilite was trading at Rs 1,297, down Rs 25.40, or 1.92 percent on the BSE at 1000 hours IST.

However, the brokerage prefers Nestle India (down 0.7 percent), Dabur India (up 0.79 percent), Colgate Palmolive (up 0.3 percent) as they are turnaround stories on market share gains.

Meanwhile, Investec Securities, on September 16, said FMCG industry growth has slowed over the last 2 quarters and is likely to be modest even in Q2.

However, given the fact that larger FMCG companies have gained market share from smaller players, the impact of the slowdown has hit larger players to a lesser extent, it added.

Further, given the benign inflation and reduced competitive intensity, the brokerage believes earnings growth for consumer staples companies will be resilient.

It also believes factors such as rising household incomes, higher propensity to spend and continued benefits of premiumization and penetration remain intact, and that will result in sector growth moving back up to double digits from FY21. "We build a 10 percent revenue and 13 percent earnings CAGR for our coverage universe over FY19-22," it said.

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