Shares of fast moving consumer goods (FMCG) companies remained under pressure with most frontline stocks Hindustan Unilever (HUL), ITC, Dabur India, Emami, Godrej Consumer Products and Procter & Gamble Hygiene and Health Care from the BSE FMCG index hitting respective 52-week lows on the BSE in Monday’s intra-day deals.

These stocks were down up to 3 per cent, compared to a 0.39 per cent decline in the BSE Sensex amid concerns related to volatile input prices, that may weigh on the profitability of FMCG companies in the coming quarters.

FMCG stocks failed to participate in the market's recovery, and the BSE FMCG index traded near its four-month lows as broad-based sectoral weakness was observed in the last few sessions.

In the past month, the BSE FMCG index underperformed the market by falling 3.3 per cent, compared to a 1.5 per cent fall in the BSE Sensex. Thus far in the calendar year 2026, the FMCG index plunged 10.3 per cent, against  a 9.6 per cent decline in the benchmark index.

Share prices of ITC, HUL, Dabur India, Emami and Godrej Consumer Products plunged in the range of 14 per cent to 30 per cent. Analysts at Axis Securities said they will closely monitor the movement of key inputs such as crude derivatives, palm oil, packaging materials, milk and sugar, along with the industry's ability to pass on higher costs without impacting volumes. Palm oil prices have remained elevated, while sugar prices could remain firm during the festive period.

Urban consumption recovery, rural demand, competitive intensity and the sustainability of recent price hikes will remain important monitorables. The pace at which companies convert improving demand into volume growth and margin expansion will be critical for earnings upgrades, the brokerage firm said in the FMCG sector update.

However, analysts at Axis Securities remain constructive on the medium-to-long-term outlook for the FMCG sector, supported by improving consumer purchasing power, low category penetration, increasing rural distribution and continued premiumisation. The shift towards branded and higher-value products should support both revenue growth and margin expansion over the longer term.

Meanwhile, input cost trends may remain subject to periodic fluctuations due to global developments, including geopolitical tensions affecting crude oil-linked inputs, along with movements in commodity prices and climate-related factors. While these factors may introduce near-term volatility, the sector’s inherent resilience and adaptability are expected to support long-term growth, Emami said in its FY26 annual report.

In the June 2026 quarter (Q1FY27), HUL’s gross margin remained under pressure, contracting 80bp YoY to 49.5 per cent (vs estimated 50.5 per cent, 50.3 per cent in 4QFY26). Ongoing geopolitical uncertainties led to 10 per cent raw material inflation. HUL took a 5 per cent cumulative price hike in Q1FY27 and indicated that it will implement further calibrated pricing actions if commodity inflation persists. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margin contracted 30bp YoY to 22.8 per cent against an estimate of 23.2 per cent, Motilal Oswal Financial Services said.

HUL continues to focus on driving volume-led revenue growth, even if it comes at the expense of near-term margins. Despite concerns around rising crude prices and macro volatility, HUL believes it is well positioned to navigate the environment through commodity hedges, accelerated cost-saving initiatives, portfolio transformation strategies, and strengthening omnichannel capabilities, the brokerage firm said. Disclaimer: Views and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers' discretion is advised.