FMCG Stocks Outlook for the week – 13 to 17.04.2015
( www.rupeedesk.in )
Stocks
of fast-moving consumer goods companies are likely to trade sideways with a
positive bias next week. The bullish trend in the sector will continue but the
upside is seen capped. The FMCG index gained 5.0% this week.
FMCG
stocks will continue to perform with a bullish uptrend next week. We will now
be looking at fourth-quarter and full-year corporate earnings, which will start
pouring in next week onwards.
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, except
Marico.
We
forecast 11.4%, 10.4%, 10.3% and 8.4% revenue growth for Colgate Palmolive
India, Asian Paints, Dabur India and Hindustan Unilever, respectively - with
volume growth to remain a prime accelerator. 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.
ITC,
on the hand, looks weaker in the near term. ITC is reeling under regulatory pressure
with respect to its cigarettes business, which contributes to 40% of its
turnover and about 70% of total operating profit.
