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FMCG industry to see decline in growth in CY19, says Nielsen India

Updated : February 14, 2019 01:05 PM IST

FMCG saw some resounding successes and a few nasty surprises in the third quarter but there is no reason to believe the great Indian consumption story is under threat.

To discuss the outlook for the space going forward, CNBC-TV18 spoke to Naveen Kulkarni, Head of Research, Reliance Securities and Sameer Shukla, RMS Leader, Nielsen India.

Kulkarni said India as a market has always been a volume story and companies that have a lot of volume-led growth got higher valuations and have managed to grow revenues higher than the industry. For example, the rerating of Nestle India started when the company’s strategy changed towards volume-led growth, he noted.

“So companies that have focused on volumes and market share have done much better than companies focused primarily on pricing and maintenance and sustenance of margins and this is expected to continue,” said Kulkarni, adding that there would be no change in strategy for companies going ahead.

Shukla said while the FMCG industry grew at 13 percent in CY18, smaller companies grew at double the pace of the industry.

According to him, the industry growth for CY19 is likely to be lower than CY18.

Shukla said towns with 1 lakh to 10 lakh population and rural India have seen maximum growth in the last few quarters and the trend is expected to continue.

Stock specific, Kulkarni said HUL is expected to deliver 20 percent plus earnings growth and the stock will deliver a 10 percent return on CAGR basis for the next two years. The earnings growth trajectory for Titan is also going to be strong, he added.
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