Nifty FMCG shines on D-Street over upbeat earnings, settles 2% higher despite all-round selloff; HUL, Marico top gainers
- Nifty FMCG index: Consumer stocks rose 2.02 per cent on upbeat corporate earnings. Top gainer Marico closed 10 per cent higher in its best session in about 15 years
The Nifty FMCG index settles 2.02 per cent higher after marking its biggest single-day gain in nearly two years on upbeat corporate earnings despite an all-round selloff in larger markets on Tuesday, May 7. Fast-moving consumer goods (FMCG giants) including Hindustan Unilever Ltd (HUL), Marico, Britannia Industries, Nestle India, and ITC logged impressive gains in the range of 5-10 per cent during today's session.
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FMCG stocks today
Consumer good maker Marico closed 10 per cent higher in its best session in about 15 years after forecasting revenue growth outpacing volumes in fiscal year 2025. The gains in the index came even as the benchmark Nifty 50 index fell for the third straight session earlier today defying positive global cues.
Stocks such as Godrej Consumer Product Ltd (GCPL), Dabur recording gains between 6-10 per cent during intra day today, while HUL settled over five per cent higher on NSE as a top gainer, logging its best single-day gain since 2024. GCPL also posted its best day in three months, after reporting a jump in its fourth-quarter adjusted profit.
Consumer goods extend winning streak: What's fueling the rise?
Britannia
Britannia reporting a drop of 3.2 per cent in consolidated net profit at ₹538.28 crore, compared to ₹558.66 crore in the corresponding period last year. The FMCG major's revenue from operations in the March quarter rose three per cent to ₹4,014.07 crore, compared to ₹3,892.02 crore reported in the year-ago period.
Amnish Aggarwal, Director - Research -Institutional Equities of domestic brokerage firm Prabhudas Lilladher has increased the FY25/26 EPS estimates for Britannia by 2.7/3.1 per cent mainly factoring in the following:
1) Improved margin guidance following strong 4Q24 (absorbed 190 basis points or bps PLI impact in base successfully)
2) Double digit volume growth guidance post elections and monsoons
3) Improving innovations and faster growing adjacencies and market share gain in core categories.
Britannia has undertaken price actions (increased grammage) in several key brands, which enabled it to post ~5.5 per cent volume growth while deflation in packaging cost and Palmoil enabled margin beat. Innovation pipeline remains strong as the company launched Good Day (Fruit and Nut), Cake Rusk and Bourbon Milk shake even as earlier innovations like Jimjam Pops, Treat and 50-50 Gol Maal sustained traction, according to the analyst.
Also Read: Britannia Q4 Results: Net profit drops 3% to ₹538 crore, revenue up 3% YoY; dividend declared
Marico
Marico reported its Q4FY24 revenue at ₹2,278 crore, up by 1.7 per cent year-on-year (YoY) however sequentially the revenue declined by 5.9 per cent. The de-growth/single digit growth YoY was largely because of subdued domestic performance. The India business witnessed de-growth of 6.3 per cent sequentially to ₹1,680 crore due to price correction in the key portfolio as it impacted sentiments however domestic volume growth came in at three per cent YoY.
Gross profit for the quarter came in at ₹1,175 crore higher by 10.6 per cent YoY with margins at 51.6 per cent improved by 417 bps YoY and as compared sequentially, gross profit declined by 5.4 per cent but margins improved by 30 bps. Going ahead, domestic brokerage Religare Broking sees a potential upside of 25.7 per cent on the stock at a target price of ₹666 against the current market price of ₹530.
‘’Going ahead from a medium to long term perspective management aims to deliver double digit revenue growth which would be driven by its strong product portfolio, focus on scaling up foods and premium personal care portfolio, expansion of distribution reach via project SETU and also continue to invest aggressively towards diversifying the portfolio and lastly focus on gaining market share,'' said analysts at Religare Broking.
Seeing the gradual pickup in rural and company focus on growing its core, favorable mix, premiumization along with cost management and also the plan is to continue gaining market share from addressable market bodes well for the growth, according to the brokerage.
HUL
The FMCG major posted a six per cent decline in its standalone net profit to ₹2,406 crore from ₹2,552 crore last year same period. During the fourth quarter, the company witnessed a slight increase in revenue from operations to ₹14,693 crore, compared to ₹14,638 crore recorded in the same period last year.
Amnish Aggarwal of Prabhudas Lilladher believes that normal monsoon can provide flip to rural demand although margin expansion from current levels will be very moderate (50 bps over FY24-26). The long-term growth levers are led by higher growth in e-commerce and categories of future (liquids, Green Tea, premium skincare etc.) and premium segments remains intact.
The brokerage estimates eight per cent profit CAGR over FY24-26. Risk reward looks favourable post little returns in last four years; however, significant re-rating looks unlikely given valuations at 44.6xFY26 and market momentum in favour of cyclicals.
Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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