Tata Securities has pointed out that slowing volume growth, coupled with high valuations, reinforces their underweight stance on the FMCG sector. Over the past three years, strong volume & earnings growth trajectory, along with investors’ preference for defensive sectors, resulted in a sharp out-performance for the sector as a whole. Apart from slowing volume growth, expensive valuations too remain an area of concern. While some stocks have reverted to their average one-year forward P/E multiples, many others continue to trade at a premium of anywhere between 10-30% over their average forward multiples. Tata has identified the best large-cap and mid-cap FMCG stocks to buy now
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