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Thursday, June 03, 2010

**[investwise]** BOA ML-Overweight FMCG, Outperformer Jyothy Labs (BSE 532926)

 

BOA-ML
FMCG Sales Reach Another Record High
In all market conditions just two sectors Outperform-FMCG and Pharma
 

Total sales growth came in at 14% - highest in last eight months. Volume growth

acceleration across most categories is the trigger for this sharp pick-up in growth.

This is against the run of play, given food inflation is still high and it is too

early for the normal monsoon outlook to make an impact.

 

We would wait and watch how the trend moves over the next couple of months. We maintain our view of a strong recovery in growth in 2HCY10, led by price hikes, higher volume growth as food inflation subsides, and a normal monsoon

supporting rural growth.

 

HUL - Sales grwth turns positive as volume growth picks up

 

HUL saw sales growth of ~4% after four months of decline. Pick up in volume

growth was the key driver. Barring Tea & Coffee, all other categories had positive

growth. Detergents continue to do well with 24% volume growth. This reflected in

value growth as well, with an across-the-board improvement, as only Coffee is still

witnessing decline. We await sustainability of this trend before revisiting our view.

 

HUL – Market share trend still a mixed bag

 

Though sales growth picked up for HUL, it failed to beat market growth, as market

shares did not show much improvement. Declines were seen in Soaps, Laundry

and Toothpaste, with slight gains in Skin Care. However, gains in Shampoos,

Tea, Coffee and Ketchups were healthy. On a long-term basis though, market

shares are still lower across most categories vs. their last year levels. Unless HUL

consistently outperforms market growth, a sustained market share gain is difficult.

Nestle – sales growth steady with market share gains

Sales growth revived to 14% in April. Market shares went up for Noodles,

Ketchups and Chocolates, with Coffee continuing its steep decline. However, the

trend over the last year has been the reverse, with only coffee recording gains.

Colgate – Sales growth up strongly with market share gains

Mar. sales grew 13%, one of the highest over last 18 months. Market shares went

up across all three key categories of Toothpaste, Toothbrush and Toothpowder.

Colgate has done well, with 140bp margin gains in Toothpaste and Toothpowder

over the last one year, driven by expansion of rural reach and low-price SKUs.

Dabur – Sales growth remains weak; Market shares mixed

Despite recovery, sales growth remained weak at 8%. Market shares were largely

neg, with losses in Shampoos, Toothpowder and Chyawanprash, and gain in

Toothpaste. Overall trend over the last one year has been positive, with share

g ains in Toothpaste, Toothpowder and Chyawanprash, and losses in Shampoos.


Safe Harbor Statement:

Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
 
Nothing in this article is, or should be construed as, investment advice.
 
 
 

 
 

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