The Hindu Business Line : FMCG stocks shine on good HLL results

FMCG stocks have started gaining the attention of market players due to the good results posted by Hindustan Lever Ltd (HLL) and other companies in the sector in the September quarter.

Brokers and analysts said FMCG stocks were beaten sharply in the last few quarters due to the slowdown in growth and the fall in profits. But now the sector is on the recovery path.

The BSE FMCG index was the biggest gainer among all the sectoral indices today. This is a good indicator of the rebound in the sector stocks. The index rose 3.46 per cent compared to the 2.69-per cent rise in the BSE Sensex.

Analysts said the interest in FMCG stocks came after HLL reported a net profit of Rs 325.96 crore for the quarter ended September 30, 2005 compared to Rs 324.32 crore in the corresponding quarter last year. The results for the September quarter were better as the last year September quarter had an exceptional item of Rs 41.85 crore. The net profit was higher from the last quarter (June) when it reported a net profit of Rs 300.47 crore. For the third quarter in row, HLL has reported a higher net profit.

In today's trading, the HLL stock rose 2.54 per cent at Rs 161.40 on the BSE. Other major gainers in the FMCG sector were ITC (up 4.38 per cent at Rs 120.30), Britannia (up 6.21 per cent at Rs 1,230) and Colgate-Palmolive (2.13 per cent at Rs 236.85). The gainers list included Shaw Wallace, McDowell and Tata Tea.

Analysts said the outlook for the stock is upbeat. The low institutional interest in the sector till now is also seen as being positive as some of them would be interested in picking up some of these stocks.

Companies such as Godrej Consumer Products, Marico, ITC and Nestle are expected to sustain their growth on the back of a generic increase in demand.

However, the upward movement of input costs is an issue for the FMCG sector. The input cost scenario is divided for the sector. While some are expected to face margin pressure going forward, a reduction in raw material costs could help expand the profit margins for others.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Capstocks opens regional office in Thrissur

Bull domination

Sensex rises 206 pts on Diwali-eve — Thin volumes indicate low investor participation

FMCG stocks shine on good HLL results

SAIL glitters on IISCO prospects

Diwali perks up market sentiment

Shree Renuka Sugars ends below offer price

ABG Shipyard fixes IPO price band at Rs 155-185

HC stays AAIFR order on Jessop rights issue

SEBI gives clean chit to JM Morgan Stanley Securities