FMCG Stocks

The FMCG industry has experienced a 6.6% growth in value, attributed to a 6.5% increase in volume at an all-India level

Selective FMCG stocks may rise up to 11 per cent, even if broader market loses more ground

Meanwhile, in the past three months, the stock has shed 16 per cent, as against 4 per cent decline in the S&P BSE Sensex.

The company said no definitive agreement or binding commitment has been signed on this matter.

The FMCG index too was seen outperforming the BSE benchmark in Thursday trade with a gain of nearly 1 per cent.

Nestle India Q4 preview: In the October-December quarter, shares of Nestle rose 2.4 per cent, while peers like Hindustan Unilever dropped 5 per cent, and Britannia gained 12 per cent

With a modest 1 per cent increase in duty on cigarettes and improving outlook for FMCG and Hotels, brokerages think ITC is well positioned for a strong FY24.

In past one month, the stock was down 20 per cent after the government decided to discontinue import of crude soybean oil under tariff rate quota (TRQ).

Given tax increase in the Budget 2023 is insignificant, ITC would continue to witness strong volume growth in cigarette business in future, said analysts

The management said that the go-to-market strategy and investments in brands & innovation helped the company register a robust topline growth of 16 per cent YoY

Brokerages believe that the proposed tax hike on cigarette in the Union Budget 2023 is not very high and would be easily passed on through small price increases

Britannia outperformed peers as shares surged 12 per cent in Q3FY23, whereas peers like Hindustan Unilever (HUL), Dabur India, ITC, and Tata Consumer declined up to 5 per cent, during the same period

Brokerages expect strong growth for ITC's FMCG business led by price hikes, strong traction in discretionary categories (due to high mobility) & strong growth in education & stationary business.

In their quarterly update, Godrej Consumer Products, Dabur, and Marico witnessed sluggish growth in the December quarter (Q3) driven by poor rural consumption and a slowdown after the festival season

Higher advertising spends coupled with inflationary pressures, analysts said, are likely to squeeze EBITDA margins up to 154 basis points (bps) YoY to 23.9 per cent in Q3FY23

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On account of challenging macro-economic environment and muted category growths in the quarter, the management anticipates to report low to mid-single digit revenue growth

But it remains a laggard on the bourses over the past decade

From the Sensex pack, Mahindra & Mahindra, Power Grid, Bharti Airtel, Bajaj Finserv, HDFC, Hindustan Unilever, Maruti, ITC, Titan, Nestle, Bajaj Finance and Reliance Industries were the major winners

Extent of margin gains will depend on extent of ad spends and price cuts