FMCG to underperform like ITC, Britannia - StanChart
FMCG to underperform; like ITC, Britannia: StanChart
FMCG major will be declaring its March quarter numbers later in the day. The company has been reporting volumes in a narrow range of 4-6 percent. But Sanjay Singh, Director, Standard Chartered, expects HUL to declare volumes even lower at 2-3 percent or less in the fourth quarter. He feels the company’s net profit growth maybe lower because of higher taxes. However, according to him, margins may remain flat and may be cushioned due to lower ad spend.
Singh says HUL is likely to trade in a narrow, rangebound manner as large investors must have exited during the open offer. He expects the stock to trade with a notional support at Rs 525-550 per share.
He however has an underperform call on the sector due to steep valuations. Among other FMCG stocks, he likes and . He believes the change in management and margin uptick are working well for Britannia. He feels the macroeconomic recovery bodes favourably for .
Below is the verbatim transcript of Sanjay Singh's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: How much weakness are you anticipating in Hindustan Unilever (HUL) numbers this time and what would be the key numbers or parameters to watch out for in the earnings?
A: The key is volume which will be a little disappointing this quarter. HUL has been reporting a very narrow range of around 4-6 percent for the last five quarters in terms of volumes but this quarter it should come down to 2-3 percent if not lower and hence volume growth will be a key disappointment in today’s results. Margin should be okay and earnings before interest, taxes, depreciation and amortisation (EBITDA) growth will be just above track the topline growth, net profit growth maybe lower because of higher tax rates. moneycontrol