Emkay prefers Nestle over Glaxo, Colgate

Posted on January 9, 2012. Filed under: Uncategorized |

Emkay Global Financial Services has come out with its report on consumer sector. As per the research firm, if consumption habits are unanimous across India, moderation in growth momentum could be evident in Q3FY12 performance. Nestle India  is relatively better placed then GlaxoSmithKline Consumer Healthcare and Colgate Palmolive .

Channel checks of inventory across India of popular SKU’s in Modern trade

In continuation of Consumer Channel Checks…. We have extended the last phase of our survey across India. We have covered 42 modern trade outlets all over India, to gauge the inventory levels of popular SKU’s. The results have strengthened our conviction of moderation in volume growth.

Key findings of the survey
• Average Mfg Dates for 37 SKU’s was 10th September, 2011
• The survey was taken during first week of December, 2011, which shows that the average inventory dates back around 3 months
• Relatively new/fresh inventory was seen in Food-Noodles and Milk – dated back 1.5-2.0 months
• Relatively old inventory was seen in Hair Oils, Toothpaste, Shampoos, Malted Food

Drinks categories – dated back in excess of 3 months
• New inventory was seen for Nestle, Britannia, being largely food categories
• Old inventory was seen for Dabur and Bajaj on aggregate basis – considering its slow moving Dabur Amla Hair Oil and Bajaj Almond Drops.
• Relative basis, Northern region and Southern region had old inventory on shelves – dating back to 3.5 months & 3 months respectively.

Key interpretation of the survey
• With inventory dating back 3 Months – Sales momentum seems moderating in the modern retail channel for fmcg categories.
• Festival season (October 2011) looks relatively silent – unable to attract footfalls and augment sales momentum in modern trade channel.
• This aptly indicates that, strong volume growth in Q2FY12 for fmcg categories has
created higher inventory in the modern trade channels.
• If, consumption habits are unanimous across India, moderation in growth momentum could be evident in Q3FY12 performance.
• Food categories are relatively better placed then Home & Personal Care segment.
• Nestle relatively better placed then Glaxo and Colgate.

FIIs holding more than 30% in Indian cos

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