FMCG Stocks Outlook for the week – 03 to 07.08.2015
Apr-Jun
earnings, IMD forecast to impact companies
( www.rupeedesk.in )
Stocks
of fast moving consumer goods companies are seen taking cues from Apr-Jun
earnings,
monsoon
forecast of the India Meteorological Department and the Reserve Bank of India's
monetary policy. In the FMCG space, Marico, Britannia Industries, Tata Global
Beverages and Emami are the main companies releasing Apr-Jun financial results
next week. The other factor that is expected to have a bearing on the FMCG
sector is IMD's third long-range forecast for this year's southwest monsoon due
on Sunday.
In
its earlier forecast, IMD estimated a below normal Jul-Sep rainfall at 88% of
the long period
average.
Monsoon rains are crucial for rural demand for consumer products. On the
earnings front, Marico is likely to post a net profit of 2.16 bln rupees in
Apr-Jun, up 17% year-on-year, and net sales of 18.29 bln rupees, up 13%.
Britannia
Industries' net profit is seen rising 34% to 1.52 bln rupees, and net sales is
expected at
19.85
bln rupees, up 12%. Tata Global Beverages' net profit is seen up 7% at 1.04 bln
rupees and
net
sales up 8% at 20.26 bln rupees, and Emami's net profit is likely to be 800 mln
rupees, up 13% and net sales up 19% at 5.75 bln rupees. Market participants
will eye sales volume growth of the companies as competitive intensity has
increased in various segments. Godrej Consumer Products Managing Director Vivek
Gambhir told Cogencis earlier this week that the company's sales growth in
2015-16 (Apr-Mar) will be led by volumes as prospects for value growth through
price increases is seen checked by competitive intensity.
With
the fall in raw material prices, competitive intensity has heightened across
all segments that the company operates in and, hence, the company will continue
to offer promotions on its products.Based on our interaction with a soaps
category expert we understand that soap is a low consumer involvement product,
as most soaps offer little product differentiation. Thus, competitive pressure remains
high in this category, depressing margins Vs other personal care products.
