The Nifty FMCG index has gained marginally so far in 2020, faring better compared to the 2.8 per cent decline in the broader Nifty 50 index. At this time when December quarter results of fast-moving consumer goods (FMCG) companies are far from encouraging. Last quarter’s year-on-year revenue growth of consumer staples firms under Kotak Institutional Equities’ coverage had dropped to 3.4 per cent, the slowest performance in the past many quarters. The demand slowdown is hitting hard and companies are seeking to persuade the Indian consumers to loosen their purse strings. Even so, some firms were able to withstand the pressures relatively better than others. For instance, market leader, Hindustan Unilever Ltd (HUL) saw an underlying volume growth of 5 per cent, which pleased many analysts even though operating revenue lagged Street estimates slightly.
Nestle India Ltd’s revenue growth of 8.7 per cent is much better than peers. The worst performer of the lot was Bajaj Consumer Care Ltd, whose revenue fell 7.9 per cent. Marico Ltd too didn’t fare well, posting a 2 per cent drop in consolidated revenue. On the other hand, a favourable raw material cost environment and a tight leash on costs helped on the profitability front. Kotak’s consumer staples’ aggregate profit after tax growth for the December quarter stood at 18.4 per cent, a shade worse than 20.1 per cent seen in the September quarter.