Mumbai: Indian fast moving consumer goods (FMCG) companies are likely to report a 16-18% net growth in profit in the quarter ended March 2008 largely led by price hikes, an extended winter and the launch of several premium products, according to some analysts.
The analysts also expect rising disposable incomes, higher consumer spending and low penetration levels to be the key growth drivers for the sector.
The industry is expected to report a 13-15% growth in sales, according to projections made by five sector analysts of securities research firms that include Morgan Stanley, Macquarie Research, Angel Broking Ltd, IL&FS Investsmart Securities Ltd, Prabhudas Lilladher Pvt. Ltd and Religare Securities Ltd.
Hindustan Unilever Ltd, or HUL, India’s biggest household-products maker, is likely to report a 19% jump in net profits in the quarter on the back of increase in the prices of detergents and skin creams, and relaunched personal care and beverages products.
“In spite of sustained cost pressures, we expect HUL’s operating margins to expand by 40 basis points. This expansion will largely be driven by a better product mix, higher growth in personal care products, improvement in laundry margins as the price war with rival Procter and Gamble ends, and superior cost management strategies,” notes Hozefa Topiwalla, an analyst of FMCG with Morgan Stanley.
India’s largest cigarette maker ITC Ltd is likely to report an increase of 15.7% in its net profit to Rs753.4 crore.
The growth will be less than expected because of the shutdown of non-filter cigarette production and sharp increase in investments by the company in non-tobacco business, the analysts said.
The average estimate on net profit for Dabur India Ltd, which owns brands such as Real juices and Chyawanprash, is Rs89.5 crore, up 14.5% from a year ago,driven by growth in its foods, international businesses and consumer care division. The company opened its first health and beauty store called ‘new-u’ during the quarter.
Marico Ltd, which owns brands such as Parachute hair oil and Saffola edible oil, is expected to report 22% growth in its net profit at Rs34.6 crore.
For Godrej Consumer Products Ltd, the forecast for growth in net profit is 36% at Rs39 crore. While Godrej is facing severe input cost pressures with palm oil prices increasing by about 70% year-on-year, the company is likely to report an 80 basis point improvement in margins due to effective cost management, say analysts.
Godrej also completed acquiring South African hair brand ‘Kinky’ for $33 million this quarter.