During an investor conference call at Proctor & Gamble, Global Chief Executive Officer David Taylor said that the company posted robust growth numbers for the year ended June 30, 2018, of which two markets — India and Turkey — reported double-digit growth. Taylor added that sales were growing for all categories in India and he was bullish on the Indian market.
Most consumer companies in India posted high year-on-year rise in profits in the most recent quarter. Nestle India’s net profit rose 49.5 percent , Mumbai-based Godrej Consumer Products reported the highest year-on-year rise of 80 percent in net profit. India’s largest homegrown CPG company Dabur India reported a 25 percent rise in consolidated net profit for the June quarter.
Several CPG players recent reduced prices in their popular categories such as home and personal care. Food and Beverage and Dairy companies such as Nestle, reduced milk prices. Analysts expect to see 14 percent growth in revenue in the current quarter, on the back of a soft base (1QFY18 saw de-stocking due to GST) and input tax credit (200-300bps) for FMCG companies. As a result, EBITDA margin for FMCG companies is expected to expand by 140 basis points
Investors have pushed the valuation of these fast-moving consumer goods companies to the highest levels. Companies listed in India’s stock market such as Hindustan Unilever, ITC, Nestle India , Colgate-Palmolive India, Dabur, Britannia, Asian Paints, and Procter & Gamble Hygiene are trading at nearly 48 times their earnings. Analysts attribute the sector’s rich valuation to strong fund inflows in addition to rising profits.
