FMCG Stocks Outlook for the week – 19 to 23.10.2015
Subdued
next week; Asian Paints earnings eyed
Stocks
of fast moving consumer goods companies are likely to be subdued next week with
investors keeping a watch on Asian Paints and Jyothy Laboratories' earnings for
Jul-Sep. Nestle India, which got a boost after the tests mandated by Bombay
High Court showed that lead content in its Maggi noodles was within acceptable
limit, is likely to trend positive next week.
An
analyst said there is still a quarter left before the noodles are back on the shelf,
and comments by the Food Safety and Standards Authority of India will also be
eyed. The disappointing earnings of Hindustan Unilever, which were released
earlier this week, and brokerage CLSA downgrading ITC stock, have dampened
sentiment for the FMCG sector, which may continue to weigh next week, too.
HUL's
earnings came in below estimates, mainly due to decline in price realisation in
a high competition environment, and lower other income. The company was able to
post good volume growth of 7% but management's comments that competitive
intensity is high across segments, and that rural demand is likely to remain
stressed indicates that pricing pressure will continue going forward.
CLSA
Asia Pacific Markets downgraded ITC stock to 'sell' from 'underperform',
stating that the rise in the stock since June is unwarranted given the
heightened regulatory risks to cigarette business. From its 52-week low of 294
rupees hit on Jun 15, the stock has risen by 17%. The downgrade outweighed news
of hike in king size cigarette prices and increase in price of 70-gm Sunfeast
YiPPee! Noodles packet by the company.
