Our FMCG universe of nine consumer stocks recorded 7.8% yoy growth in revenues during Q4 FY09.
The growth could have been better but for the underperformance of two mammoths – ITC and HUL. Mid-cap FMCG companies like Marico, Nestle, Dabur and GCPL outperformed these heavyweights by recording strong revenue growth in the range of 16-26%.
The universe registered a robust 22.5% y-o-y growth in net profit driven by improved operating efficiency coupled with higher other income and lower tax outgo. The players witnessed healthy expansion in operating margins led by lower adspend and raw material costs.
Prices of key raw materials like LAB, palm oil, crude oil and HDPE remained soft during the quarter. Milk, wheat and sugar prices though witnessed an uptrend.
Many players took price cuts and increased product grammages for passing on the input cost benefit to customers.
We maintain our positive outlook on the sector with ITC, Colgate, Marico and Nestle as our top picks.