FMCG Stocks Outlook
Seen down next wk amid poor demand from urban consumers
This story was originally published at 18:26 IST on 14 November 2024
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MUMBAI – Shares of fast-moving consumer goods companies are seen lower next week amid concerns that a slowdown in urban demand may affect earnings in the coming quarters. While some analysts hope demand will improve once inflation in India eases, current valuations do not give enough comfort to analysts.
"Slowdown in urban demand is going to create a problem in the next quarter as well," Akriti Mehrotra, research analyst with StoxBox, who covers the sector, said. "Valuations are still getting towards comfortable zones, and these stocks may fall more for a week or two, before a bounce back."
Mehrotra acknowledged that high inflation in India hurt consumer demand in the September quarter, starkly visible in the latest quarterly earnings, but also expects things to improve in the second half of this financial year. Food inflation is likely to come down during the winter, which bodes well for consumer demand going forward, she said.
Analysts are cautious of the sector after the September quarter earnings were below expectations, with several large companies forced to correct their inventories as dealers struggled to sell products. Poor quarterly earnings pushed investors to sell FMCG stocks at the start of the earnings season in October, which intensified as more companies in the sector came out with weaker-than-expected earnings. So far, the Nifty FMCG index has fallen over 16% from its lifetime high--last touched on Sept. 23. On Thursday, the index closed at 55782.70, down 1.5%.
Earlier this week, investors of Britannia Industries were disappointed after the company said it will increase prices across its entire portfolio by 4-5% in the coming two months due to rise in raw material costs. The company's management expects some impact of sales volumes in the next 6-9 months due to increases in prices. The stock fell after the management's comments. It was down over 14% this week to end at INR 4,915.60.
Britannia Industries reported its quarterly earnings on Monday, post market hours. Its consolidated net profit fell nearly 10% on year to INR 5.31 billion, while its consolidated revenue rose 5% on year to INR 46.68 billion.
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* Analyst Concall: Britannia to increase prices 4-5% across portfolio by Jan
* Earnings Review: Britannia consol PAT falls due to commodity inflation
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* Reuters: CCI documents show Swiggy, Zomato breached antitrust laws
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:
| Company | Price | Week-on-week change in % | Resistance | Support |
| Adani Wilmar | 331.05 | (-)0.80 | 340.00 | 319.00 |
| Britannia Industries | 4915.60 | (-)14.50 | 5105.20 | 4806.20 |
| Colgate Palmolive India | 2708.95 | (-)5.60 | 2805.50 | 2653.30 |
| Dabur India | 508.10 | (-)4.40 | 519.50 | 496.90 |
| Emami | 642.85 | (-)4.00 | 677.60 | 617.30 |
| Godrej Consumer Products | 1175.10 | (-)6.10 | 1209.30 | 1145.20 |
| Hindustan Unilever | 2389.20 | (-)4.70 | 2493.50 | 2331.50 |
| ITC | 465.95 | (-)2.50 | 477.80 | 456.40 |
| Jyothy Labs | 427.00 | (-)12.60 | 447.40 | 411.00 |
| Marico | 592.25 | (-)6.00 | 604.30 | 585.60 |
| Nestle India | 2182.80 | (-)4.90 | 2268.60 | 2135.50 |
| Procter & Gamble Hygiene and Health Care | 15704.00 | 1.00 | 16054.60 | 15274.70 |
| Tata Consumer Products | 925.00 | (-)6.80 | 967.30 | 900.80 |
| Varun Beverages | 575.65 | (-)2.70 | 606.40 | 555.00 |
| Nifty FMCG | 55782.70 | (-)4.40 | 57166.80 | 54997.10 |
| Nifty 50 | 23532.70 | (-)2.60 | 23756.00 | 23372.50 |
| S&P BSE Sensex | 77580.31 | (-)2.40 | 78317.60 | 77056.20 |
End
Reported by Anshul Choudhary
Edited by Vidhi Verma
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