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Informist, Thursday, Oct. 31, 2024

MUMBAI – Shares of fast-moving consumer goods companies are seen lower next week as the recent September quarter earnings have raised concerns about urban and rural demand. Analysts said commentary from several companies suggests demand in urban areas has slowed.

"There is some improvement in rural demand, but that is fairly gradual... it is not a V-shaped recovery. Some companies pointed to a slowdown in urban consumption, especially from the middle class," said a fund manager at a domestic mutual fund house.

Among major FMCG players, Dabur India reported its quarterly earnings this week. As expected, the results were affected by inventory correction. One analyst with a top domestic brokerage, who covers the company, explained that this was a sign of weak demand from dealers as they have not managed to sell their earlier inventory. Dabur India's consolidated net profit for Jul-Sept fell nearly 18% on year to INR 4.25 billion and its consolidated revenue fell nearly 6% to INR 30.29 billion.

Procter & Gamble Hygiene & Health Care also reported its September numbers during the week. The company's net profit and revenue for Jul-Sept were largely flat on year. Following the results, Motilal Oswal cut its earnings per share estimate for the company by 2.3% for financial year 2024-25 (Apr-Mar) and 4.2% for FY26. The brokerage said it is positive on the stock from a long-term perspective due to the company's strong fundamentals, but pointed out that fair valuations at this point mean limited upside for the stock. It reduced the stock target price by 4% to INR 17,800, while keeping its rating unchanged at 'hold'.
 

Despite the weak show in Jul-Sept, analysts continue to pin their hopes on rural demand, which is expected to improve in the coming quarters, with the above-normal monsoon expected to have helped raise income levels. The National Stock Exchange and BSE will hold a Muhurat trading session Friday. The pre-open session will start at 1745 IST and the special live trading session will begin at 1800 IST and end at 1900 IST.

TOP HEADLINES

* P&G Hygiene Jul-Sept sales fall 0.3% YoY, net profit rises 0.6%
* Analyst Concall: Inflation, muted sentiment partly hit Marico's urban demand
* Colgate-Palmolive gets final income tax order of INR 2.54 bln for 2021-22
* Earnings Review: Marico Jul-Sept PAT growth second highest in 17 quarters
* Gillette India Jul-Sept PAT rises 43.5% YoY to INR 1.33 billion
* Gautam Kamath resigns as director, CFO of Gillette India, effective Thu
* Cigarette makers target 9-10% revenue growth in FY25, says CRISIL
* Mitsubishi group cuts stake in Godrej Consumer to 2.1% from 5.5%

Following are the resistance and support levels for the stocks for next week as per calculations by Informist based on their prices on the National Stock Exchange:

End

Reported by Anshul Choudhary

Edited by Rajeev Pai

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