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: Looking for the rural trigger - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 30, 2001

    FMCG: Looking for the rural trigger

    The consumer products sector has reported a much better performance in terms of turnover growth in the September quarter as compared to the June quarter this year. The sample of the top five companies in the sector reported a 7% turnover growth as compared to just over 2% growth in the June quarter.

    (Rs m) Sep.QFY01 Sep.QFY02 Change
    Net Sales 30,983 33,167 7.0%
    Other Income 1,011 1,356 34.1%
    Expenditure 26,695 28,499 6.8%
    Operating Profit (EBDIT) 4,288 4,668 8.9%
    Operating Profit Margin (%) 13.8% 14.1%  
    Interest 54 62 14.9%
    Depreciation 479 602 25.7%
    Profit before Tax 4,767 5,361 12.5%
    Extraordinary items 23 175 651.5%
    Tax 1,001 1,171 17.0%
    Profit after Tax 3,789 4,365 15.2%
    Net profit margin (%) 12.2% 13.2%  
    Effective tax rate (%) 21.0% 21.8%  
    Diluted no. of Shares (m) 2423.7 2423.7  
    Diluted earnings per share* 6.3 7.2  
    P/E ratio   29.2  
    (* annualised)      

    The sample which includes Hindustan Lever (HLL), Colgate, P&G Hygiene, Reckitt and Gillette India has reported a 15% growth in bottomline. This was lower than the 17% growth reported in the June quarter.

    The consolidated numbers bring out the sector's efforts to improve operating efficiencies. The operating margins for the September quarter have improved by a minor 30 basis points YoY. However, higher depreciation provisioning and interest burden has pruned bottomline growth. Higher depreciation and interest burden are largely contributed by Gillette India.

    If we exclude the extraordinary items effect, then profit growth has been just over 11% YoY. The extraordinary items have largely been contributed by HLL. The FMCG major is also responsible for the better turnover growth showing this quarter.

    The sample sector trades at a P/E of 29x annualised September quarter earnings and a market cap. to sales ratio of 3.8x. The sector's valuations are on the higher side as compared to other sectors. The defensive nature of the sector as well as its future growth potential are largely responsible for these valuations. Going forward, a lot would depend on how the demand picks up in the coming quarters.



    Equitymaster requests your view! Post a comment on "FMCG: Looking for the rural trigger ". 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

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    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.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    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


    Aug 18, 2017 (Close)