After a lull, FMCG companies are now picking up momentum again. ITC heads the list, while Dabur has had a good spell too, both in terms of sales and profits

After a long hiatus, FMCG companies are in the thick of action at the bourses. Most companies in the ET500 FMCG list have done well, both financially and on the bourses. They have paid handsome dividends and earned capital appreciation for shareholders. All that makes investors in the sector a happy lot after years of watching, as the bellwether of the stock market refused to go anywhere but down.

Conspicuous by its absence is the giant of all FMCG stocks – Hindustan Lever. This leviathan does not figure, but merits a watch as it is at an interesting stage. The coming year will determine if the company regains the fancy of the investor community, or loses it for a long period. The company management had said in a meeting after its results that the transformation’s results would be evident in three stages, including volume growth. According to the company, they are in the second stage; what shareholders would like to see is if it moves into the next stage.

TOP OF THE RACK
1.	ITC
2.	DABUR INDIA
3.	BRITANNIA INDUSTRIES
4.	P&G HYGIENE
5	GODREJ CONSUMER PRODUCTS
6.	TATA TEA
7.	COLGATE-PALMOLIVE
8.	MARICO INDUSTRIES
9.	NESTLE INDIA
10.	GILLETE INDIA

ITC tops the companies in the ET 500 list, and its sustained performance in its main business line of cigarettes, coupled with its preliminary successes in some of the FMCG sectors it has entered, have fired up the stock. To add to this is the consolidation of its hotels businesses. Of course, the company also announced a bonus and the stock spilt after its FY05 results were announced, but the stock did not react much, indicating that these seem to have been factored in the price. ITC’s sales increased by 9% during 04’05 and its profits before exceptional items grew by 8%. Dabur also figures here because of an excellent performance, both in terms of sales and profit growth. This was aided partly by its shift to tax-exempt locations, with a recovery seen in some of its key segments. Moreover, the Balsara acquisition is expected to generate significant benefits in the long run.

The most significant event that will affect the FMCG sector in the next few months is the monsoon season. Initial forecast reports suggest that the monsoon will be normal, but there could be a delay in its onset. Yet, the past few years have shown that any prognosis will be clear only by August, when the monsoon would be on its last leg. Till then, one can expect some gyrations based on the initial forecasts issued by the weather department and conclusions drawn by market players on that.