Chart of the Day | India’s FMCG stocks are difficult to ignore, expensive valuations notwithstanding

India’s FMCG sector is growing far ahead of its peers in Asia Pacific. It makes it a difficult market to ignore for a global investor, even though expensive valuations are a bother. The sector trades at a price to earnings multiple of over 50 times.

A recent Nielsen report on the sector’s performance in Q4 2018 points out that India’s average volume growth in Q3 and Q4 was 14.8% and was higher than a year ago. As the chart shows, not a single country in this grouping could even reach the 5% mark.

Even China’s FMCG market saw much slower growth. Some of India’s high growth can be explained to a low base effect, due to the Goods and Services roll-out in the second half of 2017. But Nielsen measures retail sales, which would not have got affected to the extent that primary sales—from company to the distributor—did due to the GST roll-out.