The Hindu Business Line : FMCG stocks slump following Hind Unilever weak numbers

Kolkata, Nov. 1 The FMCG stocks today finished awash in red as the Hindustan Unilever’s quarterly results disappointed the market. Its EPS in the quarter September 30, 2007 dropped to Rs 1.85 from Rs 2.23 at the end of June quarter.

The stock, which has second highest weight (21.61 per cent) after ITC (45.64) in the 13-share BSE FMFCG Index, was the biggest loser (6.43 per cent). ITC shed 4.07 per cent, while the United Spirits, with third highest index weightage of 9.38 per cent, declined by 5.21 per cent. Marico was the only gainers among the index.

Some analysts feel the sector has not been a part of the momentum play simply because the growth has not been spectacular compared to others.

Underperformer

In the last one year the BSE FMCG stocks have been underperformer compared to the benchmark index in terms of returns. Even in the one month and one week timeframe the overall performance of the index has been negative.

However, some of the stocks in the index or outside the index but in the same space have individually performed better.

In the long-run, analysts feel, these counters are likely to perform better and catch up in terms of momentum.

According to Mr Ajay Jaiswal of Angel broking, “Once the organised retail takes roots in the country, the players in the sector would start performing better. But that is still a long shot, maybe after a year or so things would improve in terms of higher growth”, he added.

Mr Gul Teckchandani, an independent strategist, also felt that the present was short-term.

Mr V.K. Sharma felt that shift in preference through portfolio churning for better returns has also been behind the relative under-performnce of the sector. The Hindustan Unilever’s poor results, however, have served as the immediate reason.

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