The stock of domestic fast-moving consumer goods (FMCG) company Marico was up 4.15 per cent on Wednesday. It hit an intra-day high of Rs 133.50 and a low of Rs 126.55 on the Bombay Stock Exchange (BSE) before settling at Rs 130.45.
Marico was not the only domestic FMCG company to see a run-up in stock price on Wednesday. This even as the overall BSE FMCG Index was down 0.12 per cent on the back of FMCG stocks ITC and Hindustan Unilever (HUL) not performing well. ITC was down 0.25 per cent while HUL fell 0.06 per cent.
The stock price of Kolkata-based Emami, however, did not witness a dip. It hit an intra-day high of Rs 844.95 — a 52-week high for the company. It finally settled at Rs 836.05. There were a few more domestic FMCG companies that saw their stock prices move up on Wednesday: Dabur was up 0.75 per cent and Godrej Consumer Products Ltd (GCPL) rose 0.68 per cent to touch Rs 207.30 and Rs 347.75, respectively.
Anand Shah, a senior FMCG analyst at brokerage firm Angel, attributes the rise of these stocks to the likelihood of an acquisition. “These companies have been out in the marketplace scouting for buying opportunities for long. Inorganic growth is high on their agenda. The buzz about impending acquisitions drove up these stocks.”
Independent equity analyst Harish Vasudevan says the domestic consumption story is driving up these stocks. “The domestic consumption story is strong. Inorganic growth plans are there but these companies have also seen their businesses grow organically,” he said.
For financial year 2009-10, for instance, Marico’s net profit increased 43 per cent to Rs 231.67 crore, while net sales were up 11 per cent to Rs 2,660 crore. Emami, on the other hand, saw its net profit grow 85 per cent to Rs 170 crore, while net sales were up 36 per cent at Rs 1,038 crore in FY10.
Both companies have strong plans to extend operations — Marico into healthy and functional foods through Saffolo and Emami into hair care. Dabur and GCPL continue to focus on existing categories.