BackConsumer companies set to post strong revenue growth
Consumer companies set to post strong revenue growth
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Mumbai: Indian consumer goods companies, the best-performing stocks in the past one year, are expected to report strong profit and sales growth in the quarter ended March after raising prices, although volumes were little changed amid an economic slowdown.
Consumer companies may report profit gained 16.6-27.6% and revenue rose by 16.3-22% in the three months ended 31 March, according to a Mint poll of five brokerages—ICICI Securities Ltd, Prabhudas Lilladher Pvt. Ltd, Emkay Global Financial Services Ltd, Kotak Institutional Equities and Edelweiss Capital Ltd.
The BSE FMCG index, up 25.48%, was the top performer among BSE sectoral indices in the past one year. The benchmark Sensex fell 10.48% in the same period.
Consumer companies are expected to post a revenue growth of 22% in the March quarter, Emkay Global Financial Services said in its quarterly earnings preview, adding “a lot of (revenue) growth (will be) driven by price increases implemented in recent months and no improvement in volume growth momentum on quarter-on-quarter basis."
Hindustan Unilever Ltd, the nation’s biggest household goods maker, is expected to report a profit growth of 29% from a year earlier to ₹ 620 crore and revenue growth of 17% to ₹ 5,820 crore, according to Emkay Financials’ estimates. The brokerage expects Hindustan Unilever’s growth to be led by sales of soaps, detergents and personal products.
The price increases effected by companies during the quarter may not have offset the rise in the cost of raw materials, crimping operating margins.
A delayed onset of summer could also affect consumer companies, said N.H. Bhansali, chief finance officer at Emami Ltd, which makes products such as Sona Chandi Chyawanprash, Boroplus and Navratna talcum powder. The company increased revenue by expanding its reach fivefold to 5 lakh distributors. “Overall growth has been in line with our expectations," said Bhansali. “It’s coming from both urban and rural."
During the March quarter, raw material prices exhibited a mixed trend, with copra falling by 15% from the preceding quarter. However, prices of crude oil-based raw materials continued to remain high, according to Prabhudas Lilladher.
“Copra and safflower oil, key input costs for Marico, witnessed approximately 15% and 11% quarter-on-quarter correction, respectively, paving way for a sequential gross margin recovery," said Gautam Duggad, an analyst at Prabhudas Lilladher.
Marico, the maker of Parachute and Saffola oil, raised prices of some packs of Saffola during the quarter.
Hindustan Unilever expanded its Lakme and Axe range of products and introduced Rin fabric whitener, while Nestle India Ltd introduced Maggi Juicy Specialz and Milkmaid Creations during the quarter.
sapna.a@livemint.com
Also See | Earning Estimates (PDF)
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