Boost getting FMCG Sector from Rural Demand, 40% in these Stocks | Share Market Tips

Boost getting FMCG Sector from Rural Demand, 40% in these Stocks

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The growth in the Fast Moving Consumer Goods (FMCG) sector in the financial year 2018-19 can be 11 to 12 percent. According to a report by rating agency Crisil, increasing demand in the rural area will increase the top line growth of FMCG sector by 3-4%. The size of this sector in the country is about Rs 3.4 lakh crore. Market experts say the rise in the Minimum Support Price (MSP) and the good monsoon will increase the purchasing power in the rural sector, thereby increasing the profits of the companies. In such a situation, FMCG stocks can get better returns ahead.

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8% growth in FY18 

According to the report, growth in FMCG's revenues was almost 8 percent in 2018, while in FY19 it could be 11 to 12 percent. The biggest reason for this is the increase in demand in the rural sector. Apart from this, companies are also launching new products. This will increase the operating profit of companies, which will improve their credit profile. 

FMCG Sector to get Factors Support

The advantage of increasing MSP

Sandeep Jain, Director of Trade Swift Broking, says that the government has increased the Minimum Support Pricing (MSP) for the production of agriculture. This will increase the income of the villagers. Consumption will increase due to increase in income, which will be benefited by FMCG companies.

Sahara will get good monsoon

The monsoon department has estimated this year's normal monsoon in the country. Market Expert According to Sachin Sarvadee, due to good monsoon, the rise will increase. The income of the villagers will increase with good yield. On the other hand, opportunities for non-agriculture employment have also increased. This has increased the disposable income of the villagers, which will increase the demand.

Trying to woo new product launches

Continuous new products are being released continuously by the companies. These include products of ayurvedic and herbal products. Demand from this is also expected to increase. Rural market companies hold about 40 to 45 percent of the sales. In such a situation, the increase in demand in rural areas will increase the total income of companies from 15 to 16 per cent in 2019. In 2018, it had registered a growth of 10 percent. According to Crisil, this growth was around 5 per cent in 2016 and 2017. 

What Stocks Invest In

Emami
Target: 1341
 Brokerage House, Cholamandalam Securities has advised investment in the Emami with a target of 1341. According to the broking firm, the company is focusing on new launches. The company has a strong hold in the rural areas. It is expected to get the benefit of any increase in income in the rural areas in the coming time. The company will also benefit from better monsoon. However, the profit of the company fell 28 per cent to Rs 60 crore in the fourth quarter. But revenue growth was 12.3 percent. Current price can get returns up to 32% in the stock.

Marico
Target- 380

Expert Sandeep Jain has advised investment in FMCG Sector Company Marico Limited. In the fourth quarter of fiscal year 2018, the consolidated net profit of the company increased by 7.19 percent to Rs 183.2 crore. Last year, the company's net profit was Rs 170.91 crore in the same quarter. In current fiscal, the company is expected to revive in the rural market. Jain says that the government is hopeful of raising rural demand in the mid-term due to the emphasis on rural development and increase in the minimum support price of the crop. Expert has given a target of 380 rupees in stock. The current price can get returns of up to 21%.

Read more - What stocks invest in

Britannia
Target- 6600

Market expert Sachin Sarvade has advised to invest in FMCG sector company Britannia Industries. According to him, Britannia has a consistently healthy performance. The company is expanding in distribution, increasing investment in R & D. In addition to biscuits, the company is going to launch new products in the financial year 2019. The company will also get the benefit of this. Sachin has advised to invest in the stock with a target of 6600 rupees. With a current price, it can get 22% return.

ITC
Target- 390

Expert Sandeep Jain, an expert in FMCG Sector ITC, has advised investment with a target of Rs. 390. Apart from cigarettes, the company has increased its business in Biscuit, Flour, Noodles and Personal Care and Lifestyle section. The fourth quarter results will be released on May 16. Current price can get a return of 38% in the stock.

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