Business Daily from THE HINDU group of publications
Tuesday, Sep 11, 2007
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Business Daily from THE HINDU group of publications Tuesday, Sep 11, 2007 ePaper |
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Stock Markets Markets - Stocks
BL Research Bureau Chennai, Sept.10 Signs of moderation in milk prices from their highs, if sustained, could alleviate margin pressures for FMCG companies focused on dairy and milk products. Nestle India, which derives over 40 per cent of its sales from milk and infant products and GlaxoSmithkline Consumer Healthcare, which relies entirely on health drinks such as Horlicks and Viva for revenues, may be key beneficiaries of this trend. According to reports, milk and milk powder prices have declined by over 20 per cent from their July peak on higher domestic surpluses after a long spell. Exports
Exports of milk powder were banned in February to contain spiralling milk prices in the domestic market. Though it is not yet clear if the export ban will be lifted in end-September (when it expires), a good monsoon and the commencement of the flush season for milk production could both exert downward pressure on domestic prices, even if exports are resumed. For FMCG companies such as Nestle India and GlaxoSmithkline Consumer, the relief on margins could be twofold as both milk and sugar prices have seen a sharp decline, after a relentless rise until last fiscal.
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