• 2019 was the slowest growth in 15 years: No signs of a recovery yet. FMCG growth in 2019 is estimated to be the lowest in 15 years, at ~7%.

• Worst year for consumer stocks in a decade: Despite tax cuts, nine of the ten consumer staples stocks underperformed the Nifty in 2019, making this the worst performance in a decade for the sector. Stocks like HUL/ITC/United Spirits/Marico/GCPL have seen their P/E correct by 10-30%.

• New headwinds on the horizon likely to squeeze low-income consumption further: (1) a sharp spike in food inflation, (2) cutback in state government spending, and (3) jump in telecom tariffs. All of these will hit low-income consumption more and squeeze consumption in mass FMCG categories.

• Potential recovery in agriculture in 2020: While excess rains in 2019 damaged the summer crop, the winter crop could be good as soil moisture and reservoir levels will be high.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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