Shares of consumer durable FMCG companies such as Dabur, Colgate Palmolive, Nestle, Emami and others run the risk of an earnings downgrade due to their expensive valuations and the competitive pressure they face from Baba Ramdev’s Patanjali products.
Nestle, that competes with Patanjali’s products, is currently trading at 88 times to its 12-month earnings; Emami is seen trading around 44-times; Dabur is trading at about 40 times; while Colgate-Palmolive’s valuations are at 39.5 times to its one-year earnings.
Analysts are increasingly worried over such expensive valuations. They say that certain extent of lower volume growth in companies such as Colgate and Dabur is already visible. Also, Patanjali is getting a strong traction towards segments like honey and shampoo, according to The Economic Times.