FMCG stocks also saw strong pressure for the second day. Shares of giants HUL, BRITANNIA and GODREJ CONSUMER slipped nearly 3%. Due to today’s fall, these three stocks reached 52-week lows. How much fall has been seen in FMCG stocks so far this year. What is the reason for weakness in FMCG sector? Which company and what is the effect of the rise in commodity prices. Let’s have a look on this-
Broken FMCG Shares in 2022
If we look at the stocks of FMCG basket, this year i.e. in 2022, only ITC stock has seen a rise of 13%, all the other giants are looking weak in FMCG stocks. HUL has seen a decline of 16% so far, Marico is down 5% and Dabur has seen a decline of 9%.
On the other hand, Jubilant Foods and Godrej Cons saw the biggest decline i.e. 29% each, while Britannia and Nestle saw a decline of 13% each.
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Why FMCG Shares Broken
Margins were under pressure due to rising commodity prices. There has been a sharp jump in the prices of wheat, sugar, milk, edible oil. Margins will fall despite the recent increase in product prices.
How much did companies increase prices
The effect of raising prices by companies has also been visible on their shares. Nestle has increased the prices of its products by 9-16%. On the other hand, HUL has increased the prices by 3-13%. Dabur Company has increased the price of its products by 5% while Britannia has increased its prices by 10%.
Rise in commodity prices also affected prices
Wheat became costlier by 48% in 2022
Wheat has become costlier by 48% in 2022. At the same time, wheat is mainly used in the products of many FMCG companies. Parle’s products use 40% wheat while Britannia’s products use 35% wheat. Apart from this, 40% of wheat is also used in the products of Jubilant Foods.
Milk prices increased by 15-25%
Due to the increase in the price of milk, its effect on the products of many companies is clearly visible because milk is used by many companies to make their products on a large scale.
Milk is used in 35-40% of Nestle’s products. At the same time, 40% milk is also used in Jubilant Foods.
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Palm oil becomes costlier by 36%
Many FMCG companies use palm oil to prepare their goods. The effect of increasing its price is reflected in the prices of those companies. It is used in 60% of the products of HUL, which is one of the largest companies in the FMCG sector. At the same time, up to 60-70% palm oil is used in the products of Godrej Cons.
On the other hand sugar prices have become costlier by 10% and FMCG companies use it by 50-60%.
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