X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
FMCG Mid-cap: 1QFY07 review - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Aug 25, 2006

    FMCG Mid-cap: 1QFY07 review

    In our last article we wrote on the performance of the large FMCG companies (link) for the June quarter. In this article, we bring you an analysis of the performance of 4 mid-cap FMCG companies. This analysis comprises of Marico, GSK Consumers, Godrej Consumer Products (GCPL) and Colgate.

    Rs (m) June-06 June-07 Change
    Net sales 9,396 11,428 21.6%
    Expenditure 7,970 9,648 21.1%
    Operating profit (EBDITA) 1,426 1,780 24.8%
    Operating profit margin (%) 15.2% 15.6%
    Other income 221 309 39.8%
    Interest 30 67 123.3%
    Depreciation 219 280 27.9%
    Profit before tax 1,398 1,742 24.6%
    Tax 349 478 37.0%
    Profit after tax 1,049 1,264 20.5%
    Net profit margin (%) 11.2% 11.1%

    What has driven performance in 1QFY07?
    Outperforming at the topline level: The topline of the 4 FMCG companies grew by a decent 21.6% YoY. This was mainly due to growth across all categories like hair oil, soaps and oral products. When compared to the larger FMCG companies, the mid-caps have outperformed these companies in terms of sales growth. It should be noted that FMCG is more of a volume game, and with increasing demand for products across categories, sales are likely to be robust going forward.

    If we take a company-wise break-up, GCPL's core portfolio of soaps (66% of revenues) outperformed (21% YoY growth) the industry growth (8% YoY) once again, while revenues from the toiletries segment grew by a strong 41% YoY, backed by growth across categories (talcum powder, shaving cream and diapers). GSK Consumer's flagship brand, 'Horlicks', reported strong double-digit growth during the quarter. Also, its 'Chocolate Horlicks' brand witnessed strong sales on the back of strong sales and marketing efforts. Marico witnessed good volume growth across its hair care range. It focus brands grew by 25% YoY. Colgate too witnessed a healthy 11% YoY increase in volumes.

    Stable-to-positive margins: The expenses of the 4 mid-caps under consideration increased at nearly the same pace as sales. Raw material prices (as a % of sales) have witnessed a decline during the quarter. However, the companies witnessed higher labour and advertising costs. Most of the companies increased their advertising costs in order to face increasing competition and launch new products. Going forward, we expect input costs to rise.

    Bottomline growth in-line: The growth in the bottomline of the mid cap companies, at 21% YoY, was similar to the large caps. However, this trailed the growth in topline as well as operating profits. This was mainly because of higher interest costs. Also, the tax outgo has increased, as the Baddi plant benefits have nearly come to end, and the effective tax rate increased from 25% in 1QFY06 to 27% this quarter.

    Of the 4 companies, Marico performed the best, with an impressive 45% YoY increase in its bottomline. Colgate also performed well due to volume-driven growth. Of the 4 companies, GSK Consumers was hit on margins due to increased costs of items like labour.

    What to expect?
    Mid-cap companies are performing well and are increasing their weight in the FMCG sector. These companies have the potential to explore untapped markets and are already gaining acceptance. We believe that these companies are likely to introduce new variants and will invest in building brands in the future and this, we believe, will drive growth.

     

     

    Equitymaster requests your view! Post a comment on "FMCG Mid-cap: 1QFY07 review". Click here!

      
     

    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    P&G: Strong Core Growth (Quarterly Results Update - Detailed)

    Dec 9, 2016

    Procter & Gamble Hygiene and Health Care has announced the first quarter results of the financial year ended June 2017 (1QFY17). The company's sales rose by 12.5%YoY while net profit rose by 50.1% YoY during the quarter.

    Nestle India: Sales Traction From New Products (Quarterly Results Update - Detailed)

    Nov 30, 2016

    Nestle India declared results for the quarter ended September 2016. Here is our analysis of the result.

    GSK Consumer: Price Hike Hurts Volumes (Quarterly Results Update - Detailed)

    Nov 30, 2016

    GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.

    Marico: Margin Expansion Drives Profit Growth (Quarterly Results Update - Detailed)

    Nov 28, 2016

    Marico has reported a flat topline while the bottomline has grown by 18% YoY during the quarter.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE FMCG


    Aug 23, 2017 12:40 PM

    S&P BSE FMCG 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS