Stocks of major fast-moving consumer goods companies are expected to gain further in the week ahead as investors increase exposure to the category given good Apr-Jun earnings of leading companies in the sector. Yesterday, Marico Ltd reported its Apr-Jun earnings. The company reported a 46% year-on-year rise in its Apr-Jun consolidated net profit to 1.24 bln rupees thanks to a strong 16% sales volume growth in its domestic consumer products business. The company's consolidated net sales also bettered the Street view, rising 22% on year to 12.67 bln rupees.A key factor that helped Marico was the fact that the company did not hike product prices in Apr-Jun, so that it could maintain sales volume growth. Earlier, companies such as Hindustan Unilever Ltd, Colgate Palmolive Ltd, and ITC Ltd have also reported better-than-expected Apr-Jun earnings, bringing traction to stocks in the sector. Despite the better-than-estimated Apr-Jun performance, Marico's stocks yesterday ended down nearly 3% as the management expressed doubts on the company's ability to maintain its margins in the subsequent quarters. Maintaining sales volume growth and operating margin growth are seen as the two big challenges for FMCG companies in the subsequent quarters as the economy slows and disposable incomes of consumers contract.
