FMCG Stocks Outlook for the week – 20 to 24.04.2015
( www.rupeedesk.in )
Shares
of fast-moving consumer goods companies are likely to trade in a range, with a
positive bias next week. The FMCG index gained 0.3% this week. The FMCG stocks
would also be impacted next week on Jan-Mar earnings of companies and full financial
year earnings that are likely to be announced next week onwards. Shares of FMCG
companies are expected to trade in the green during next week and beyond on
firm earnings estimates for Jan-Mar.
FMCG
companies are likely to report an overall revenue growth of 10.2% in Jan-Mar. Volume
growth will outpace growth in price realisations for all FMCG companies. We
forecast 11.4%, 10.4%, 10.3% and 8.4% revenue growth for Colgate Palmolive
India (Ltd), Asian Paints (Ltd), Dabur India (Ltd) and Hindustan Unilever
(Ltd), respectively - with volume growth to remain a prime accelerator.
Notwithstanding
the volume pressure on cigarettes, we remain positive on ITC Ltd. Due to ITC's unparallel
distribution reach, focus on expansion of its non-cigarette FMCG business and
an expected revival in discretionary spending by consumers.
Godrej
Consumer is a good stock as far as the current valuation is concerned. The only
downside is that some of its acquired entities are in the consolidation phase.
Once it is completed, they will start adding to its profitability. Marico gets
70% realisation in sales from urban markets and these markets are the growth
drivers in the FMCG sector as rural consumption has gone down in the last few quarters
and are expected to remain subdued in the coming few quarters. The FMCG
companies are yet to announce the date of earnings disclosure, excepting Dabur,
which will announce the earnings on May 5.
