- JPMorgan cuts FY27 earnings outlook for India's FMCG sector due to rising costs
- Preferred stocks include Hindustan Unilever, Marico, and Godrej with lowered targets
- Dabur and Colgate targets cut sharply amid strategic and portfolio uncertainties
JPMorgan has turned more cautious on the FY27 earnings outlook for India's FMCG sector, cutting price targets across several stocks as higher crude prices and input-cost inflation put pressure on margins. In its latest India FMCG report, JPMorgan said investors are shifting focus from a consumption recovery to the durability of demand and margins, particularly as crude-linked inflation picks up.
It expects the recent commodity-cost surge to create a 1–3% downside risk to FY27 EPS estimates across its coverage universe. The brokerage noted that FMCG companies can partly offset inflation through price hikes, cost controls and supply-chain efficiencies, but sustained cost inflation could still test consumers' ability to absorb higher prices.
JPMorgan's Preferred Stocks
Hindustan Unilever remains JPMorgan's preferred large-cap exposure, with an Overweight rating, although its target price has been cut to Rs 2,375 from Rs 2,425, implying roughly 21% upside.
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Marico also remains Overweight, with its target reduced to Rs 915 from Rs 960, implying about 13% upside.
Godrej Consumer Products retains an Overweight rating, while its target has been lowered to Rs 1,000 from Rs 1,050, implying roughly 16% upside.
The brokerage said cheap valuations alone may not be enough to drive outperformance during a volatile inflationary period.
Dabur, Colgate Targets Cut Sharply
JPMorgan maintained a Neutral rating on Dabur India, but cut its target price to Rs 425 from Rs 485 — a reduction of more than 12%, implying about 11% upside.
For Colgate-Palmolive India, JPMorgan retained Neutral and reduced its target to Rs 1,976 from Rs 2,250, also a cut of roughly 12%, which is about 6% upside from the last closing.
The brokerage highlighted strategic and portfolio changes at companies such as Dabur, Colgate and Godrej Consumer as factors that have introduced some uncertainty around growth priorities and capital allocation.
JPMorgan retained its Underweight rating on Honasa Consumer with a target price of Rs 410, versus a report price of Rs 469.30, implying around 13% downside.
The brokerage said FMCG companies have historically shown resilience during inflationary cycles, but the current environment puts greater emphasis on pricing power, margin protection and consistent execution.
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