FMCG stocks gain; Nestle India, Britannia, Dabur, GSK Consumer hit new high

Shares of fast moving consumer goods (FMCG) companies were on a roll with Nestle India, Britannia Industries, Godrej Consumer Products, Dabur India and GlaxoSmithkline Consumer Healthcare have rallied up to 7%, hitting their respective new highs on the BSE in an otherwise subdued market.

At 10:47 am; the S&P BSE FMCG index was trading 0.57% higher at 12,563, as compared to 0.04% decline in the benchmark S&P BSE Sensex. The FMCG index hit a new high of 12,641 on the BSE in intra-day trade on Thursday.

Pratap Snacks (PSL) has rallied 20% to Rs 1,288 in intra-day deal, after the company announced acquisition of Avadh Snacks - Gujarat's leading snacks food company. PSL has agreed to acquire 80% equity stake for a consideration of Rs 1,480 million through a combination of primary & secondary investment.

Dabur India, too, hit a new high of Rs 485, up 6%, surged 24% since July 31, post April-June quarter (Q1FY19) results. The company reported a better-than-expected domestic volume growth of 21% in Q1FY19 against analyst expectations of in the range of 10% to 15%.

“We have been witnessing a gradual improvement in consumer demand. Our focus on brand-building and market expansion coupled with innovation has helped Dabur sustain strong growth in our core categories, which has been significantly ahead of the market. Going forward, we will continue to focus on pursuing an aggressive and profitable growth strategy,” Sunil Duggal, chief executive officer, Dabur India said while announcing Q1 results.

Nestle India too hit a new high of Rs 11,378, up 4.5% on the BSE in intra-day trade. The stock gained 50% in past six months, as compared to 12% rise in the Sensex.

“Among the various points discussed in the analyst meet, we were particularly enthused by the volumes outperformance of 200bp (not shared in interim results) versus our estimate, which consequently prompted us to raise our sales and PAT forecasts for FY19. At the same time, we also note that the current-year margins have been largely propped by extremely muted material costs,” the brokerage firm Motilal Oswal Securities said in a note.

While the sales prospects appear promising for CY18 and CY20 (highest for Nestle since CY11), the risks on the margins front are high, particularly after the windfall gross margin gains in 1HCY18. This is mainly because material costs have started trending up and management has stated its intention of protecting growth even if it means lower price increases than in the past in response to material cost movement, it added. However, the brokerage firm maintains ‘Neutral’ rating on the stock with a target price of Rs 10,620.

GlaxoSmithkline Consumer Healthcare has soared 8% to Rs 7,695, extending its 7% rally in past two trading sessions on the BSE.

According to Bloomberg report, UK pharmaceutical giant GlaxoSmithKline Plc has requested bids by mid-September for its $4.3 billion Indian consumer-health unit, which owns the popular malted milk brand Horlicks.

The UK drugmaker announced in March that it aims to complete a strategic review of Horlicks and other nutritional products by the end of this year. The company is assessing its 72.5% holding in India-listed GlaxoSmithKline Consumer Healthcare Ltd. as part of that process. Proceeds from a potential sale could be used to finance Glaxo’s $13 billion buyout of Novartis AG’s stake in their consumer-health joint venture, added report. CLICK HERE TO READ FULL REPORT

PRATAAP SNACKS 1231.50 1073.50 14.7
GLAXOSMITH C H L 7580.00 7114.75 6.5
DABUR INDIA 484.95 458.95 5.7
NESTLE INDIA 11390.00 10887.80 4.6
GODREJ CONSUMER 1432.30 1381.40 3.7
MARICO 374.50 362.45 3.3
HIND. UNILEVER 1775.80 1752.40 1.3
COLGATE-PALM. 1178.45 1164.25 1.2

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