Monday, September 05, 2005

Future of FMCG stocks ..

We have seen a good performance of the FMCG funds in past few months. The prospects for FMCG funds have improved manifold. The fortunes of the FMCG companies are linked to the overall economy. With the average income levels going up, people are willing to spend more on FMCG goods among other things. This has resulted in incremental revenues for these companies, improving their bottomlines also.

Prudential ICICI FMCG was the best performing sectoral fund in the past 12 months with a return of 128.44 per cent. In fact, FMCG funds have led all other equity fund categories in the past one year with an average category return of 91.85 per cent.

Last few years, consumption levels were not high. That situation is now changing and we are seeing an uptrend in consumption patterns across the country. Volume growth is happening across the FMCG segment, whether it is paints, soaps, shampoo, etc. Penetration levels in India are also low compared to that in developed countries like US and UK. So there is a huge opportunity waiting to be tapped by FMCG companies.

Besides urban consumption patterns, factors like the monsoon are also driving the FMCG growth in India. Major companies derive half of their revenues from the rural segment, which is mainly dependant on the monsoon. Considering all these factors, FMCG companies should be able to grow fast for the next several years.

It is expected them to post a growth of 12-15 per cent going forward.

Which all FMCG stocks are you going to invest?

2 Comments:

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Blogger Crazy Economist said...

Good post, actually the FMCG stocks are more closely related to economy than other stocks are.

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September 22, 2005 11:15 PM  

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