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D-Street Buzz: HUL, Tata Consumer hit 52-week high; Axis Securities sees FMCG as a 'dark horse'

Naveen Kulkarni of Axis Securities said that FMCG will do well in the near term and is also a dark horse at this juncture as the sector has not performed at all in the last 12 months.

June 22, 2021 / 02:31 PM IST

Market continues trading in the green but is off day's high with Sensex up 159.25 points or 0.30% at 52733.71, and the Nifty adding 67.90 points or 0.43% at 15814.40.

The FMCG index is trading in the red with Nestle India, Hindustan Unilever, Marico, Bajaj Consumer and Godrej Consumer trading in the red.

In a report, Motilal Oswal recommended a buy on Hindustan Unilever with a target of Rs 2780 per share. According to the brokerage firm, while Q1 FY22 will be impacted by the second COVID wave, the extent will be far lower compared to last year. Rural continues to remain resilient, and demand in health, hygiene, and nutrition categories remains healthy, it said.

Also Read: 'Nifty FMCG steadily growing; medium to long term investors can hold positions till 36,650-37,000'

"While discretionary demand will be affected, we expect the impact to be lower YoY. EBITDA margin is likely to remain under pressure owing to sequential RM inflation and higher A&P spends," it added.

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"From a medium-term perspective, the outlook remains positive. The strong outlook on rural, GSK Consumer synergies, and sustained growth and premiumization in skin cleansing offer further medium-term tailwinds. We maintain our buy rating with a target of Rs 2,780 per share," it added.

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The stocks that have hit a 52-week high on BSE from this space included Bajaj Hindustan, Hindustan Unilever, Shree Renuka Sugars, Tata Consumer Products and Venkys.

Naveen Kulkarni, Chief Investment Officer at Axis Securities in an interview with Moneycontrol said that FMCG will do well in the near term and is also a dark horse at this juncture as the sector has not performed at all in the last 12 months.

"This could play out in the next six months as there are price hikes and nominal growth rate picking up for FMCG companies translating into operating leverage and good earnings traction," he said.

In an interview with CNBC-TV18, Gautam Duggad, Head-Research, Institutional Equities at Motilal Oswal Financial Services said that the stock prices are running ahead of fundamentals and there’s a need to be very stock-specific when buying from broader markets.

According to him, consumption in India is also an evergreen story. Nothing has changed over there. Our picks in that basket have also not changed over the last 4-5 years; what we like, by and large, remains the same – the likes of Hindustan Unilever, Titan Company, Pidilite Industries, Britannia Industries and Tata Consumer Products, he said.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandip Das
first published: Jun 22, 2021 02:31 pm

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