We expect I-direct consumer discretionary (CD) universe to continue its growth momentum even in Q3FY21E amid strong festive demand and market share gains. The CD universe is likely to report revenue growth of 13% YoY led by paints, electrical consumer durable (ECD), pipes segments. We believe paint companies will report strong volume growth for Q3FY21 (in the range of 14-15%) supported by inventory build-up by dealers ahead of withdrawal of discounts by the companies. The recent surge in auto OEMs sales volume and a low base of decorative paints would benefit Kansai Nerolac in terms of strong volume growth of 15% in Q3FY21E. On the ECD front, companies like Bajaj Electricals, Crompton Greaves Consumer, Havells India are likely to report a strong revenue growth in the consumer appliances categories (up to ~16% YoY) owing to changing consumer lifestyle (work from home) and market share gains from unorganised/regional players due to their robust supply chain network and pan-India reach. On the piping business, we believe Supreme Industries and Astral Poly would report strong volume growth in Q3FY21 (up ~22%, 30% YoY, respectively) supported by continuous rural/semi-urban demand in addition to pent up demand from metro regions.
Universe expected to show strong bottomline growth
The I-direct CD universe is likely to see ~21% YoY growth at the PAT level due to better margins and lower interest cost. We believe, from our coverage, Supreme Industries, Astral Poly, Bajaj Electricals and Kansai Nerolac will be ahead of the peers in terms of bottomline growth.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ConsumerDiscretionary_Q3FY21.pdf