FMCG Stocks Outlook for the week – 08 to 12.12.2014

FMCG Stocks Outlook for the week – 08 to 12.12.2014

Stocks of fast moving consumer goods companies with an urban focus may outperform the broad
market next week, as an improvement in the jobs market and revival in the economy stands to
benefit urban India first.

The Urban demand that started stagnating about two years back is likely to see significant revival
as the economy improves and jobs come back. Companies like Nestle and Jubilant Food Works
will benefit from this and outperform in the near term. The inflation cools and more jobs are
created in the market, the discretionary spends of urban consumers will rise as consumers will
have more cash to spend.

As urban India upgrades and buys more premium products, it is obvious that these companies
will also benefit as more products are going to be sold using the modern retail channel.

Stocks of ITC gained last week after media reports, quoting sources, suggested that the
government may put the plan to ban sale of loose cigarettes on the backburner. India's largest
cigarette maker ITC would be adversely impacted if the proposal to ban sale of loose cigarettes comes into effect, as it is estimated that about 70% of its cigarettes are sold in this manner.