FMCG Stocks Outlook for the week – 07 to 11.08.2017

FMCG Stocks Outlook for the week – 07 to 11.08.2017

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FMCG Stocks Outlook for the week – 07 to 11.08.2017 )

The stocks of most fast-moving consumer goods companies are expected to consolidate next week, with trade channels expected to reach functional efficiency following weeks of disruption with the implementation of the new indirect tax regime. Most FMCG companies such as Colgate-Palmolive (India) Ltd, Hindustan Unilever Ltd and Dabur India Ltd have reported results above or matching market expectations, which may lend some positivity to he stocks.FMCG companies experienced weeks of de-stocking prior to the implementation of the new indirect tax regime, but with the rural demand of the country rising on the back of a good monsoon, companies are expected to show growth going forward. The likes of Dabur and Colgate are among the key beneficiaries of the lower tax bracket under the new goods and services tax. Both the companies have cut prices in their toothpaste and toothbrush categories and are expected to compete aggressively for market share with Patanjali Ayurved Ltd. Industry heavyweight ITC Ltd is expected to trade sideways in the near term after seeing correction for about three weeks. The cigarette maker is expected to launch a wide variety of products in the coming months. Maker of Parachute hair oil, Marico Ltd, has shown a 12% fall in its net profit as stockists and the Canteen Stores Department had deferred purchases ahead of the rollout of the goods and services tax. Biscuit-maker Britannia Industries is expected to rise steadily in the near term and is expected to cross over to the 4,000 rupee level soon. The shares of the
country's largest FMCG company Hindustan Unilever are seen leading the way and rising
over the next few weeks. Most FMCG companies are expected to gain due to the input tax credit benefits under the new tax regime. Input credit is the system by which organised companies, at the time of paying tax on output, can deduct the tax they have already paid on inputs.\

Source : Cogencis Information Services Ltd.