FMCG Stocks Outlook For The Week – 04 To 08.12.2017

FMCG Stocks Outlook For The Week – 04 To 08.12.2017

             Equity Cash/Futures/Options Segment 

Stocks of bellwether fast moving consumer goods companies such as ITC Ltd, Hindustan Unilever Ltd, and Britannia Industries Ltd are expected to fall next week as a rise in raw material cost is likely
to hit their profitability. Prices of copra and eggs have been rising for the past few weeks. However, a cut in indirect tax rate on many FMCG products may help lift volume of the companies. The GST Council had cut taxes on 178 items from 28% to 18% from Nov 15 and many of them fall under FMCG category. We expect improvement in Dabur's volume growth trajectory going forward on the back of trade stabilisation post GST rollout. Dabur is also expected to benefit from lower base effect of 2016-17 (Apr-Mar). Biscuit maker Britannia Industries Ltd's focus on expanding to newer categories would help the company increase its volume in the long run. The company is focused on expanding distribution reach, increasing direct reach 2.3 times in the past three years to 1.7 mln
outlets. Deeper penetration in rural markets would further widen its reach and aid in revenue growth.

Source : Cogencis Information Services Ltd.

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