The rise and rise of Patanjali is leading to downgrade of Dabur, Nestle, Colgate Palmolive

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The rise and rise of Patanjali is leading to downgrade of Dabur, Nestle, Colgate Palmolive Baba Ramdev’s Patanjali’s phenomenal rise is posing some serious troubles for FMCG giants like Dabur, Nestle, Emami, etc.
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The shares of these FMCG giants, which have dominated the industry, had expensive valuations and this can lead of downgrade of earnings.

Nestle is trading at 88 times to its 12-month earnings; whereas Emami is around 44-times.

Meanwhile, Dabur is trading at about 40 times and Colgate-Palmolive's valuations are at 39.5 times to its one-year earnings.

Patanjali products, which range from soap to medicines, have become an instant hit among consumers.

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Patanjali clocked revenues of about Rs 450 crore in fiscal year 2012 and shares of Colgate-Palmolive declined 21.7% in last one year.

Aditya Mathur, research analyst at Citi, told ET, “There are competitive pressures for the incumbents due to Patanjali. The pricing of products might be an issue in categories such as health supplements, including honey, chyawanprash, and also certain premium segments like hand and face wash, and others, where the price value equation could work in Patanjali's favour."