FMCG/CONSUMPTION SPACE; REVIEW

Readers of this Blog would recall that in earlier Posts we have discussed/analysed Best Entry Price Ranges for some of the FMCG/CONSUMPTION space favourites. Since then, much water has flowed under the bridge, as they say and the market Macros have undergone rapid changes. We all are aware that currently Markets are in the throes of pain inflicted by the Eurozone crisis, the resulatnt massive risk-aversion. the rather unprecedented weakening of the Rupee against the Dollar and much else. Compounding the global woes are the India specific internals such as sticky inflation, agonisingly long- drawn rate tightening, the much touted Policy Paralysis etc etc. However, at this juncture, it is important for us to step back and try and identify emerging patterns from this maddening morass.

As I see it, for the Indian Markets, the first definitive pattern that is identifiable is that we are presently entering what I call the 'cusp phase' ie the twilight zone wherein the Interest Rate Cycle seems to be peaking out but the softer regime is not yet clearly evidenced or in position. The second pattern is more to do with global investor psychology than anything else,wherein the Eurozone jitters seem to have taken the form of a mental contagion; global investors spent on coping with Greece only to find Italy rear its head and no sooner have these whsiperings died down that , lo and behold, it seems to be Spain and Portugal now. I mean , utter caque it is. There is no denying the basis of the problem but my experience tells me that these Eurozone rumblings have been terribly overdone as far as the Market sentiment is concerned.

Be that as it may, the take away for Indian retail investors is that we cannot do much about the second pattern talked about above but we definitely can reorient our starategy to take cognizance of the first pattern ie the 'cusp phase' mentioned earlier. In simple terms this means that NOW we need to take a relook at our approach towards the FMCG/CONSUMPTION space.

Thus far, as we are all aware, the FMCG/CONSUMPTION space has been an investors delight ,yielding great returns as well as stability to portfolios that had good entry levels. But now onwards, firstly we will have to scale down expectations as well as be extra careful that we do not enter at exuberant PE levels. This is important, since sooner or later incremental smart money will start entering the Rate-sensitives with the result that even great FMCG plays will underperform the rising Markets; they will not give the super-normal returns that one had come to expect of them; their returns will strictly mirror earnings growth, no more no less. Of course, they will not correct as much as the Markets on the downside and thus will again becoming true DEFENSIVES - important for a long term Portfolio in so far as the need for stability is concerned but unable to power a Portfolio's Returns purely on their own. eg an investor entering VIP IND at 130 and expecting it to regain 200 levels and sustain there will be sorely disappointed.

Secondly there will be evidence of PE contraction meaning thereby that expecting Stock X to consistently trade at 30x FY12E will be pure folly. Thirdly, second rung Scrips in the space, irrespective of Earnings growth, will tend to underperform the front liners in the space eg TTK PRESTIGE despite its slated high growth path will underperform a front liner with more moderate Earnings growth such as NESTLE.

To cut my rantings to size, I am presenting below the brief compilation of what I feel are the Best Entry Price Ranges for some FMCG/CONSUMPTION favourites:

-ASIAN PAINTS  BEST ENTRY PRICE  2750-2900. levels  DETAILS

-BAJAJ CORP BEST ENTRY PRICE  101 and below            DETAILS

-GLAXOSMITHKLINE CONS HEALTH  2142-2273 levels DETAILS

-HAWKINS BEST ENTRY PRICE  1150-1250  levels           DETAILS

-HSIL BEST ENTRY PRICE  160-180  levels                         DETAILS

-JUBILANT FOODWORKS BEST ENTRY 680-780 levels   DETAILS

-JYOTHY LABS BEST ENTRY 163 and lower                       DETAILS

-KAJARIA CERAMICS BEST ENTRY 100-117  levels         DETAILS

-LA OPALA BEST ENTRY 82-102  levels                              DETAILS

-LOVABLE LINGERIE BEST ENTRY 275-300 levels           DETAILS

-NESTLE BEST ENTRY 4141-4237 levels                              DETAILS

-PAGE INDUSTRIES BEST ENTRY 2250 levels                    DETAILS

-TITAN INDS  BEST ENTRY  185-195 levels                         DETAILS

-TTK PRESTIGE  BEST ENTRY  2239-2450 levels                DETAILS

BEST OF LUCK!!!!