MUMBAI, November 16: If you are tracking FMCG stocks, it would suffice to look at the Sensex instead of half-a-dozen scrips individually for their tops and bottoms. Consider this. Most of the personal care MNC shares scaled their peak on August 6, the day the Sensex peaked to 4605 points. Moreover, the Sensex and these scrips had risen in tandem after the market bottomed out at the fag end of 1996-97.

These fast moving consumer goods multinationals are highly fancied by the investing community and, hence, activity in these counters follow the broad market trend. Thus, one can safely assume a timely entry into these stocks during the bear phase and a profitable exit at the next bull phase.

Nevertheless, the upward movement appears to be much more pronounced for top-rated companies like Reckitt & Colman, Hindustan Lever and Indian Shaving Products, which have outperformed the market. From March-end to the present, the Sensex has gained 12 per cent (from 3319 to 3723 points). Over the same period, Reckitt & Colman surged by 84 per cent from Rs 194 to Rs 356; Hindustan Lever by 49 per cent from Rs 899 to Rs 1340; Indian Shaving Product by 41 per cent to Rs 563 and Proctor & Gamble by 39 per cent to Rs 740. Colgate Palmolive, however, betrayed this trend by underperforming the market and, on a point-to-point basis, remained almost stagnant around Rs 280. Meanwhile, Ponds has fallen from its cum-bonus level of Rs 1000 to Rs 885.

The differential between the top and the bottom level during 1997-98 so far has been attractive for almost all FMCG stocks except Colgate. While the Sensex retraced by 39 per cent from its bottom level at 3319 on March 31 to its peak at 4605 on August 6, Colgate gained only 42 per cent over its bottom at Rs 268 on March 31 to Rs 382 on August 6. All others including Hindustan Lever, Indian Shaving Products, Ponds and Proctor & Gamble scaled their peaks on August 6 rising from their lows on and around March 31.

Reckitt Colman, however, was at its highest around Rs 380 on September 9.Currently, all these stocks are on the downhill following the general market trend. However, the fall is less pronounced in the case of Reckitt & Colman -- 6 per cent from its peak. While the Sensex dropped by 19 per cent to 3319 on November 11 from the peak 4605 on August 6, FMCG stocks tumbled rather sharply from their top levels. Hindustan Lever lost 16 per cent over its peak, Indian Shaving Products 23 per cent, P&G 25 per cent, Colgate 26 per cent, Bausch & Lomb 44 per cent and Ponds 59 per cent. Of these, Ponds and P&G have come down after surging on bonus announcements and peaking out at their cum-bonus prices.

Among FMCG MNCs, however, investor reaction to individual stocks is different. Colgate Palmolive is rated lower by investors because of increasing competition in Colgate's core business of toothpaste with the market share down to 60 per cent. This is perceived as putting pressure on the company's revenue and bottomline. Colgate plans to raise its revenue to Rs 2,000 crore by the turn of the century which calls for Rs 300-400 crore additional investment. This is likely to be financed mainly through debt which will increase the interest burden lowering net profit.

Indian Shaving Products, a 51 per cent subsidiary of Gillette, has an 11 per cent share in the Indian shaving products market, is perceived as too overvalued. The company acquired Duracell and is marketing whole range of its batteries in India. Meanwhile, the anticipation of a buy-back by Proctor & Gamble before 1998-end has made the counter attractive. The company issued a 1:2 bonus to increase liquidity to enable it to make an offer for buy-back of shares which would raise its stake to 68 per cent.

By giving itself a facelift through refocussing business strategy (tie-up with Piramal group company for marketing brands like Dettol), Reckitt & Colman has attracted attractive. The company's efforts to reposition its brand portfolio is being looked at favourably by investors.

Besides, the company's parent is a world leader in the anti-septic and disinfectant market. Ponds surged on the bonus expectation. However, after the 1:1 bonus announcement, the counter saw heavily unloading with prices collapsing on the bourses. Currently, the scrip has lost much of its sheen.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.