Shares of fast-moving consumer goods (FMCG) companies declined 3.5% on Thursday, led by sector heavyweight ITC, which disappointed the Street with below-expectation first quarter topline numbers and slowing volume growth.

The ITC share dropped over 4.5% after the diversified consumer staples manufacturing company reported Q1FY14 revenue at R7,339 crore, up 10% from the corresponding period last year. On an average, the Street had expected the company?s revenue to grow to R7,500-7,700 crore. However, the company?s 18% growth in net profit growth at R1,891 crore met Street expectations.

?After turning profitable in Q4FY13, ITC’s FMCG business is back in losses. Volume growth was disappointing too,? said Nitin Mathur, consumer and retail analyst, Espirito Santo Securities, adding that overall Indian FMCG business is expected to be back in losses after turning profitable in Q4FY13.

Mathur highlighted that cigarettes volume declined around 2-3% and has a ?neutral? rating on the ITC shares that trade at a price-to-earnings (P/E) of 34.1 times and 28.2 times, FY14 and FY15 EPS estimates, respectively.

The BSE FMCG index was the biggest loser on Thursday and ended down 3.33% or 250.71 points at 7,270.50. Overall, all scrips in the index ended weak on Thursday.

The weakness was seen reflected in Hindustan Unilever (HUL), which will announce its Q1FY14 results on Friday. The HUL share declined 3.2% on the BSE as the Street got cautious and booked profits in stocks across the sector. United Breweries lost 3.2%, while Colgate Palmolive ended down 2.6%. Dabur India declined 2.3% despite reporting Q1 results on Wednesday that met with the Street expectations.

Analysts said Dabur?s Q1 numbers were in line with expectations with volume growth of 9% year-on-year (y-o-y). However, high valuations, likely slowdown in margins and stress on profitability going forward due to high commodity prices got the Street worried.

Sensex down 286 pts

Dragged down by losses in stocks of FMCG giants ITC and HUL, the benchmark S&P BSE Sensex on Thursday dropped 286 points to end below the 20K-mark at a two-week low of 19,804.76.

The 30-share Sensex initially touched a high of 20,110.81 and subsequently declined to settle at 19,804.76, a loss of 285.92 points or 1.42%. PTI