With consumerism thriving, stock prices of listed consumer goods companies have provided investors a juicy return of 42pc in 2014-to-date, outperforming the KSE-100 index’s gains of 22pc by a wide margin.
Last year, the consumer goods stocks did even better, rising 85pc against the benchmark index’s return of 49pc.
“Sales revenue of a sample of 47 consumer goods companies listed on the Karachi Stock Exchange — with a market capitalisation of Rs1.5trn and accounting for 21pc of the bourse’s aggregate market capitalisation — grew by 12.4pc, and their earnings rose by 17.9pc in the first nine-months of 2014,” says Vahaj Ahmed, head of research at Topline Securities.
Food, beverages, pharmaceuticals, tobacco, footwear and personal care products have witnessed growing demand.
Following the departure of Unilever Pakistan Ltd from the KSE when its parent company bought back its shares, Nestle Pakistan — whose products range from milk to juice, water, baby food and cereal — stands out as the largest fast moving consumer goods (FMCG) company on the bourse, with a market capitalisation of Rs378bn.
The company has posted stellar growth over the past five years, with sales rising from Rs34bn in 2008 to Rs86bn in 2013. This corresponded with an increase in earnings from Rs1.6bn to Rs6bn.
The second biggest company, Rafhan Maize, saw sales surge from Rs11bn to Rs24bn and after-tax profit from Rs1.5bn to Rs3bn in the five-year period.
Excluding companies that can be counted on one hand, almost all FMCGs have done equally well. Interestingly, Murree Brewery, which derives its revenue from several lines of products besides its well-known brew, stands out in terms of stock market performance this year, having rallied 151pc year-to-date.