FMCG shares in focus; HUL hits new high, ITC up 2% post Q4 results

HUL, P&G Hygiene, Britannia Industries, Colgate-Palmolive, Jubilant FoodWorks, Dabur India and Marico were up in the range of 1% to 4% in otherwise weak market

Shares of fast moving consumer goods (FMCG) companies were trading higher with Nifty FMCG and the S&P BSE FMCG index gaining 2% in otherwise weak market. On comparison, the benchmark indices were down 0.4% at 02:24 pm.

Hindustan Unilever (HUL), Britannia Industries and Colgate-Palmolive (India) hit their respective new highs on the BSE.

ITC has moved higher by 2.5% to Rs 289 after the company reported net profit of Rs 29.33 billion in line with estimates for the quarter ended March 2018 (Q4FY18). 

HUL rallied 4% to Rs 1,581, extending its previous day’s 1% gain, after the FMCG major reported a better than expected sales volume growth of 11% in Q4FY18. Analysts expected sales volume growth in the range of 5% to 8%.

HUL reported 14.2% increase in its standalone net profit to Rs 13.51 billion in Q4FY18, driven by a strong double digit volume growth. EBIDTA (Earnings before interest, tax, depreciation and amortization) margin improved 240 bps to 22.5% in Q4FY18 from 20.1% in Q4FY17.

HUL has reported a robust 11% volume growth and 240bps margin expansion as benefits of cost efficiency programs and improved product mix have boosted profitability. Medium term outlook looks encouraging given gradual pick up in rural demand, sustained benefits from GST, normalisation of trade channels, low base for 1Q and 2Q19 and success of new launches in naturals segment.

Although HUL expects increase in competitive activity and higher input costs, sustained benefits of Premiumisation in Home Care, success in naturals with Lever Ayush, Citra, Indulekha etc. and strong growth in emerging categories (premium laundry, hand wash, Liquid dish wash, Hair conditioner, Face‐wash and Green tea) will enable steady margin expansion, analysts at Prabhudas Lilladher said in result update.

Procter & Gamble Hygiene and Health Care (up 3% at Rs 9,378), Britannia Industries (2% to Rs 5,575), Colgate-Palmolive (India) (2% at Rs 1,175), Jubilant FoodWorks (2% at Rs 2,449), Dabur India (1% at Rs 375) and Marico (1% at Rs 316) were trading higher in the range of 1% to 3% in otherwise weak market.