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Stocks of major FMCG companies are seen correcting further in the week ahead, and see more room for profit booking. Sector heavyweight ITC's Oct-Dec earnings will be eyed. ITC will report its Oct-Dec earnings on Jan 18, and is expected to register strong sales volume growth in the non-cigarettes FMCG businesses. Sales volume growth in the company's critical cigarettes business is seen remaining stable.
Despite heavy tax burden and regulatory restrictions, ITC's core cigarette business continues to display resilience with stable earnings growth and flat volume growth. Over the past week, the BSE FMCG index lost 3.7%, while the broader indices lost around 1%. Marico was the only stock to report a gain in value in the week. The company announced a de-merger of its loss-making skin care solutions business into a separate company, a move that was cheered by investors as the parent company attempts to become a pure-play FMCG player.
The fall in FMCG stocks is due to increased investor interest in stocks of companies across other sectors such as real estate, infrastructure, information technology and metals, which are available at relatively cheaper value, when compared with FMCG stocks. Overall, FMCG companies are seen reporting good Oct-Dec earnings with margin and sales volume expansion, which will attract investors back to these stocks.
