FMCG Stocks Outlook for the week – 25 to 29.05.2015
In
range; ITC weak as Jan-Mar result below view
( www.rupeedesk.in )
Stocks
of fast-moving consumer goods companies are likely to trade range-bound next
week with some volatility expected due to expiry of the futures and options
contracts. Heavyweight stock ITC is seen weak as the company's Jan-Mar earnings
missed analysts' estimate. ITC's net profit in Jan- Mar rose 3.6% on year to
23.61 bln rupees, while net sales were up just 0.5% at 91.88 bln rupees. ITC's
net profit was seen at 25.27 bln rupees and net sales at 98.23 bln rupees
during the quarter.
On
ITC's Jan-Mar quarter performance. To-down miss to expectations with muted
growth across all parameters. Cigarette volume decline estimated at 14-15% YoY.
Agriculture segment was the major dampener to the revenue. There could be some
shift in investors interest to Hindustan Unilever with overall trend in ITC
expected to be weak. Market participants will keep a watch on Jyothy
Laboratories’ Jan-Mar financial results, which will
be
detailed on Monday. Most of the key FMCG companies have already declared their
Jan-Mar earnings and hence there aren't any fresh triggers in the FMCG space.
Now, the main thing that we have to keep an eye on is how the monsoon fares. We
can see some movements in FMCG sector during that time. The southwest monsoon
is crucial, as it affects rural demand patterns for consumer goods.
The
other stocks that will be in focus are Nestle India and Dabur India. Market
will keep an eye on Nestle, after reports of probe by various state Food and
Drug Administrations on Maggi Noodles, regarding higher than permitted level of
lead and monosodium glutamate in the product. The company has denied adding
monosodium glutamate to the product and said the authorities' tests may have
detected glutamate, which occurs naturally in many foods.
It
also said that lead content in the product was within permissible limits. Dabur
India, which has 60% share in the Indian packaged juice market, is set to hike
prices of its flagship juice brand Real as well as launch a new sub-brand Real
Wellness soon. The company will hike prices of most products under Real, which
is now a 10-bln-rupee brand, by 6.1% in mid-June. Meanwhile, Godrej Consumer
Products that has been on a downward journey this week, is likely to trade
sideways next week.
