Shares of Hindustan Unilever (HUL), India’s largest FMCG company by market capitalisation, have rallied nearly 10 per cent month-to-date (MTD) in July 2025, outperforming the Nifty FMCG index, which is up just 2 per cent during the same period. On a year-to-date (YTD) basis, HUL has gained over 8.50 per cent, while the index is down by nearly 1.50 per cent.
The FMCG sector, usually seen as a safe haven during uncertain times, has largely remained an underperformer even as the broader equity market has recovered in recent months despite ongoing geopolitical tensions and concerns around global inflation triggered by US tariffs. Meanwhile, the Nifty 50 index has surged nearly 6 per cent YTD.
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Nifty FMCG Top Constituents Lag Despite Recovery In Broader Markets
ITC, which has the highest weight in the Nifty FMCG index at 32.92 per cent, has been flat so far in July and is down nearly 14 per cent YTD. A major part of this fall is due to the demerger of its hotel business, which led to a re-rating of the stock.
Nestle India, another major player with a weight of 7.95 per cent in the index, has declined 1.80 per cent in July and has managed to yield a modest return of 3.40 per cent on an YTD basis.
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HUL, which holds an 18.91 per cent weight, has played a key role in keeping the Nifty FMCG index relatively steady.
Meanwhile, some FMCG stocks such as Tata Consumer Products and Britannia have bucked the trend, delivering benchmark-beating returns so far this year. Tata Consumer has surged nearly 17 per cent YTD and Britannia has climbed around 20 per cent.
Factors Driving HUL Shares Higher
Management Change: HUL’s recent-most trigger is the new appointment of Priya Nair as the managing director and CEO of the company, effective August 1, 2025. Nair will be succeeding Rohit Jawa. At present, Nair serves as the business group president – beauty and wellbeing at Unilever.
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Company Restructuring: Investors anticipate that HUL’s plan to focus more on its core business areas, such as beauty and wellness by acquiring skincare brand Minimalist and spinning off its Pureit and ice cream businesses could help the company improve its margins going forward.
Increased Disposable Incomes: In Union Budget 2025, the government increased the no-tax income limit to Rs 12 lakh, with an aim to increase the consumers’ disposable incomes. With higher disposable incomes, investors have been anticipating increased demand within the sector, especially for the premium, high-quality, sustainable and personalised products.
FMCG Sector Outlook 2025
Ajit Mishra, senior vice president, research, Religare Broking, told Outlook Money: “FMCG stocks are often seen as a defensive hedge against market volatility, including uncertainties like the US tariff actions or broader geopolitical risks. Their demand remains relatively stable across economic cycles, as consumption of essential goods doesn’t fluctuate drastically.”
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He added, “Most FMCG companies are domestically focused, limiting their direct exposure to global trade disruptions. As a result, they are less affected by tariff-related risks and tend to offer stability during periods of heightened economic uncertainty.”
Brokerages are nevertheless cautious on near-term performance of the sector, citing persistent demand challenges and input cost pressures. According to Axis Securities, “Volume growth for FMCG companies under coverage is expected to remain soft, continuing the trend seen in Q4FY25, with rural markets outperforming urban regions due to persistent urban demand weakness.”
Elara Securities also said that while demand remained steady in Q1 FY26, “weak urban consumption and an early monsoon impacted summer-centric categories, such as beverages and cooling products (hair oil and talc).”
In fact, the early arrival of the monsoon hit several summer-linked product categories hard. Elara said, “Although this quarter typically benefits from the summer portfolio, the early onset of monsoons, with unseasonal rains from the last week of May, hit sales of summer-led categories."
Axis also noted, "The summer season largely remained muted across the sector, impacted by unseasonal rains and an early monsoon. Summer-reliant categories such as beverages, ice cream, and talcum powder are likely to witness pressure this quarter.
