Stocks

FMCG stocks rise on Rly Budget proposals

Priyanka Pani Mumbai | Updated on March 12, 2018

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Allowing ready-to-eat branded food on trains act as a trigger

Investors in major consumer company stocks seem to have pinned high hopes on the Narendra Modi Government’s Railway Budget, which said ready-to-eat branded food will be served to passengers on board trains.

While the Sensex closed lower by 137 points at 25,444.81 points on Wednesday as investors turned cautious on fiscal numbers projected by the Economic Survey 2013-14, shares of major fast moving consumer goods (FMCG) companies and food manufacturers bucked the trend, closing in the green. The BSE FMCG index gained 0.81 per cent on the BSE at 6,803.28. The Hindustan Unilever scrip closed at ₹627.95, up 0.3 per cent after touching the day’s high at ₹634. Similarly, Nestle, maker of instant noodle brand Maggi, closed at ₹5,004, up 0.5per cent, while Godrej Consumer, which makes Chicken Cutlets and Veg Nuggets, edged up intraday, but closed with a marginal loss. Jubilant Foodworks, owner of quick service restaurant chain Dominos and Dunkin’ Donuts and New Delhi-based Dabur, which runs the Lite Bite fast food chain and also has a number of packaged food and juice brands, and diversified conglomerate ITC, which has a large segment of ready-to-eat meals under its brand Kitchens of India, also edged up with handsome gains. According to analysts, the rally was in reaction to the Railway Budget, which said that passengers can now order meals from food courts at stations and buy pre-cooked, ready-to-eat food from approved third-party vendors while on the move through their mobile phones and internet.

This Railway budget announcement could provide a major boost to the slackening ready-to-eat and packaged foods segment, which was severely impacted due to the economic slowdown. Companies will now focus on packaging and pricing that would allure the consumers travelling in trains.

Indian Railways runs 12,617 trains everyday carrying more than 23 million passengers across 7,172 stations in the country and this is a big opportunity for these consumer companies.

Sahil Gilani, Director — Sales and Marketing, Gits Food Products, said, “Introducing ready-to-eat meals in Indian Railways is a very encouraging step. Making these meals available to the passengers will help build awareness and acceptability of these products in the Indian mindset.

It would propel the complete category. Not only will this step ensure better quality and hygiene to the end-consumer but also reduce food wastage.”

Published on July 09, 2014

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