Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

FMCG & Alco Bev - Q3FY21 Results Preview - HDFC Securities

Posted On: 2021-01-13 08:55:24 (Time Zone: Arizona, USA)


Mr. Varun Lohchab, Head Institutional Research, HDFC Securities & Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities

Aggregate revenue/EBITDA to grow by 8/7%: Our FMCG coverage universe is expected to deliver growth of 8/7% YoY in revenue/ EBITDA (ex-GSK, 6/6%) in 3QFY21 (vs. 5/8% in 3QFY20 and 7/5% in 2QFY21). Recovery in demand continued across segments as easing of restrictions lifted sentiments. Discretionary categories like personal care, OOH, liquor, and tobacco, which were laggards in 1HFY21, saw healthy recovery. However, growth for categories like packaged foods, essentials and hygiene segments witnessed moderation, while growth in healthcare continued to remain healthy. Despite the reduced growth divergence within categories, the divergence between urban and rural recovery continued to remain significant. Rural demand was the key driver of growth across channels and categories. However, we expect the divergence in demand to continue normalising and urban to bounce back, going forward. Categories like hair care and discretionary personal care saw a recovery, which was driven primarily by the value segment. While MT improved QoQ, growth momentum sustained for GT and e-comm as consumers remained wary of venturing into large stores.

Discretionary categories witness demand revival: Liquor, cigarettes and OOH categories saw a sustained recovery in 3QFY21. Reopening of pubs and bars in most states during 3QFY21 drove a recovery in on-premise consumption. Although the recovery was gradual, off-premise is expected to support growth in 2HFY21. Similarly, the loss of dine-in sales also lowered as sentiments improved and consumers began venturing out. However, it is not expected to return to pre-COVID level in 3QFY21 and delivery will be the key driver of growth. OOH, categories like Juices saw a gradual recovery, although in-home consumption is expected to drive growth in Juices.

Margins to remain at a healthy level: Commodity inflation was higher than 2QFY21, particularly for palm oil and crude derivatives. Copra saw marginal inflation, while ENA and Mentha price remains tepid. We expect EBITDA margin expansion, driven by cost-saving initiatives, gradual restoring of overhead costs, and oplev. However, product mix in discretionary categories is expected to be adverse as value segments have been key drivers of growth. Companies have also resumed A&P investments, and we expect growth in A&P spend vs decline in 1HFY21. We expect EBITDA margin expansion for Nestle, Britannia, Dabur, GCPL, Marico, Colgate, Jubilant, Emami, Radico and margin contraction for ITC and UNSP.

3QFY21 Outliers: Britannia, Nestle, Emami and Radico.

Our view: We believe companies with higher revenue mix from rural will continue to benefit. Ecomm will continue to gain pace as consumers remain wary about venturing into crowded MT stores. Hence, companies with a strong presence and diversified offerings in e-comm will do well. We expect recovery in categories like Liquor and QSR to continue to be strong, driven by easing of restrictions and strengthening demand for home delivery. FMCG sector has underperformed Nifty by ~20% in the past six months, and we see a balanced risk-reward for the FMCG sector for FY22/FY23 with earnings led stock returns.

We have a BUY rating on ITC, ADD rating on Radico, UNSP, Colgate, Dabur, Marico and GCPL.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

SRF Limited - Chemical biz's good performance may continue - ICICI Securities

Multi Commodity Exchange of India - Lower turnover impacted operating performance - ICICI Securities

Q3FY21 Company update - Zensar Technologies - ICICI Direct

JSW Steel - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Biocon Ltd - ICICI Direct

Symphony Ltd - Q3FY21 First Cut - ICICI Direct

Crompton Greaves Consumer Electricals - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Bajaj Finserv - ICICI Direct

Q3FY21 Result update - Bajaj Auto - ICICI Direct

Quant Pick - Hero MotoCorp - ICICI Direct

Company update - Cyient Ltd - Q3FY21 - ICICI Direct

Covid Recovery Pulse - Auto retail taper off in new year 2021 - ICICI Direct

Q3FY21 Result update - Asian Paints - ICICI Direct

Company update - Mphasis Ltd - Q3FY21 - ICICI Direct

SBI Life Insurance - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Syngene International - ICICI Direct

Stove Kraft Ltd (SKL) - IPO - Weak Financial Track Record - Reliance Securities

Maintain BUY on Bandhan Bank - Prudently cushioning for potential event risk - HDFC Securities

Maintain SELL on Asian Paints - Bolt out of the blue - HDFC Securities

Maintain ADD on Cyient - Gradual acceleration - HDFC Securities

Maintain ADD on Havells India - Beat across the board; justifying rich valuation - HDFC Securities

Maintain SELL on Shoppers Stop - Still not out of the woods! - HDFC Securities

Cyient - 'Persistent' in the making! - ICICI Securities

Balkrishna Industries - Industry exports growth continues to shine - ICICI Securities

Kajaria Ceramics - Impressive beat; rerating to continue - ICICI Securities

Jindal Steel & Power - Realisation driven earnings boost fails to improve risk reward - ICICI Securities

Asian Paints - Seemingly a beat in 3Q, however, flat revenues in 9MFY21 is what we should focus on - ICICI Securities

Westlife Development - Weak dine-in continues to be a drag - ICICI Securities

Bandhan Bank - Superior operating metrics can absorb interim shocks - ICICI Securities

Bajaj Auto - Higher exports, premium share boost margins - ICICI Securities

Hindustan Zinc - Valuation support dims - ICICI Securities

Havells India - Turnaround in Lloyd should lead to multiple expansion - ICICI Securities

Q3FY21 Result update - HDFC AMC - ICICI Direct

Q3FY21 Result update - Federal Bank - ICICI Direct

Q3FY21 Result update - Bandhan Bank - ICICI Direct

Q3FY21 Result update - Kajaria Ceramics - ICICI Direct

Biocon - Q3FY21 First Cut - ICICI Direct

MCX - Q3FY21 First Cut - ICICI Direct

Q3FY21 Result update - Sagar Cements - ICICI Direct

Q3FY21 Result update - Hindustan Zinc - ICICI Direct

Q3FY21 Result update - Havells India - ICICI Direct

IPO Review - Home First Finance - ICICI Direct

ADD on Bajaj Finance - Priced to perfection - HDFC Securities

Maintain BUY on IRB Infra - Smart recovery - Q3FY21 - HDFC Securities

Maintain BUY on Federal Bank - Sustained improvement in key metrics - HDFC Securities

Maintain ADD on L&T Infotech - Leadership continues - HDFC Securities

Maintain REDUCE on L&T Technology Services - Trajectory improving, but priced in - HDFC Securities

Tata Communications - Transition hiccups? - ICICI Securities

Federal Bank - Steady performance in most business metrics; collections back at pre-covid level - ICICI Securities

L&T Technology Services - Large deal wins are more than priced-in! - ICICI Securities



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020