Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Q3FY21 Result Preview - FMCG - ICICI Direct

Posted On: 2021-01-12 03:22:02 (Time Zone: Arizona, USA)

With the strong demand conditions backed by festive season demand & increasing out of home activity, FMCG companies are expected to witness stronger growth in the December quarter. We believe 'at-home' consumption for branded packaged food has helped companies to accelerate the unbranded to branded consumption shift. Moreover, we believe increasing out of home activity has resulted in stronger growth for discretionary products as well. Our FMCG coverage universe is likely to witness 12.1% revenue growth (ex-ITC 16.4% increase) with strong growth in ITC (FMCG), Nestlé, Dabur, Marico, Tata Consumer Products (TCPL) & Zydus wellness. Moreover, with increase in some commodity prices (palm oil, tea), companies have taken selective price increase, which would have also contributed to growth. Aggressive new products in H1FY21 have been contributing 1-4% to sales for most FMCG companies. ITC FMCG business is expected to continue its growth momentum with higher growth in packaged foods categories. We believe Dabur would witness stronger growth in health supplement portfolio (Chyawanprash & Honey) given higher winter demand for immunity boosting products. Moreover, entire Ayurveda range of products are gaining traction for company. Marico has seen double digit volume growth in Q3 with continued traction in Saffola & foods portfolio. The growth in HUL is largely contribute by acquired businesses but mature categories (detergents, personal care) are likely to see muted sales. We expect higher 13% sales in Nestlé that is likely to be aided by higher primary sales (distribution stocking up). With increased health awareness & stronger distribution network, Zydus is likely to see 11% rise in gross sales but due to expiry of tax benefits, net sales is likely to grow 7%. With price hikes in tea & continued consumption shift from unbranded to branded, TCPL is expected to continue the growth momentum with 13.9% (like to like) increase in sales. We expected cigarettes companies (ITC, VST) to witness 6-7% YoY volume decline (Q2FY21 -12-14% volume decline) with slower recovery.

Stable operating margins despite adverse RM price movement

Our coverage universe is (ex-ITC) is expected to see 20 bps increase in operating margins despite high inflation in some of the commodities. Though tea prices have cooled off from 70-80% YoY higher in Q2FY21 to 30-40% higher in Q3FY21, it would impact gross margins for HUL & Tata Consumer Products given only partial price hikes have been taken in the last six months to pass on this price inflation. Similarly, palm oil prices (average) in Q3FY21 has been up 35% compared to Q3FY20. This would also partially impact FMCG company's gross margins but bigger impact would be felt in Q4 and price hikes in many categories are imminent. FMCG companies have been able to rationalise their overhead & advertisement spends to offset adverse raw material price movement. Net profit (ex-ITC) is expected to witness strong 23.1% growth.

For details, click on the link below:

Source: Equity Bulls

Click here to send ur comments or to

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., 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. 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:

4th Industrial Conclave - Bullish undertone, favourable valuation - HDFC Securities

Sanofi India - Weak quarter; sequential improvement - ICICI Securities

Sunteck Realty - All eyes on upcoming launches - ICICI Securities

Company Update - Tata Motors - ICICI Direct

Q4CY20 Company Update - Mahindra CIE Automotive - ICICI Direct

Event Update - Hindalco - ICICI Direct

EY report launch at BioAsia 2021 - Moving the needle: Healthcare industry in a post-COVID world

Initiating Coverage - Dalmia Bharat Ltd - HDFC Securities Retail Research Desk

Initiating Coverage - Mastek Ltd - HDFC Securities Retail Research Desk

Hindalco Industries - Status quo maintained - ICICI Securities

Tata Motors - India business scaling in the right direction - ICICI Securities

IPO Review - Heranba Industries Ltd

Company Update - Narayana Hrudayalaya - ICICI Direct

Ambuja Cements - Market share sustenance key for rerating - ICICI Securities

ADD on Astral Poly Technik - An 'astr'onomical growth story - HDFC Securities

FMCG Sector Update Report - Divergence narrows; refocus on core - HDFC Securities

Maintain REDUCE on Jubilant FoodWorks - More legs for growth; reflecting confidence on core - HDFC Securities

Torrent Power - Growth acceleration - ICICI Securities

Mahindra CIE Automotive - CY20 performance closes on a strong note - ICICI Securities

Q3FY21 Company Update - V-Guard Industries - ICICI Direct

Quant Pick - Indus Towers - ICICI Direct

Q4CY20 Result Update - Ambuja Cement - ICICI Direct

Q3FY21 Company Update - Nesco Ltd - ICICI Direct

Maintain BUY on Ambuja Cements - Healthy quarter; multiple triggers ahead - HDFC Securities

Heranba Industries Ltd. - IPO - Sound Financials & Promising Outlook Augur Well

India Equity Strategy Report - Quarterly flipbook: Q3 - upgrades galore! - HDFC Securities

Earnings Wrap Q3FY21: Encouraging quarter, broad based recovery under way!

Shilpa Medicare - USFDA import alert at Jadcherla unit - ICICI Securities

Q3FY21 Company Update - Indian Bank - ICICI Direct

Quant Pick - Torrent Power - ICICI Direct

GE T&D India - Strong cashflow - ICICI Securities

Q3FY21 Result Update - Graphite India - ICICI Direct

Q4CY2020 Result Update - Varun Beverages - ICICI Direct

Q3FY21 Company Update - NBCC Ltd - ICICI Direct

Quant Pick - United Breweries - ICICI Direct

Q4CY2020 Result Update - Nestlé India - ICICI Direct

Q3FY21 Result Update - Time Technoplast - ICICI Direct

Healthy Business Performance Puts ITC Stock Recovery on Track

Gold - Feb 17, 2021 - Reliance Securities

Maintain REDUCE on Nestle India - Steady revenue show; employee cost dents margins - HDFC Securities

Varun Beverages - Q4 CY20 Result and Concall Update - YES Securities

Nestle India - Q4 CY20 Result Update - YES Securities

Reiterate BUY on JMC Projects - Some hits, some misses - HDFC Securities

Varun Beverages - Strong volumes; higher margins - ICICI Securities

Computer Age Management Services - Play on industry AUM growth - ICICI Securities

Nestle India - Just a tad underwhelming (given the high benchmarks expected from Nestle India) - ICICI Securities

NHPC - Earnings robust; projects on track - ICICI Securities

Maintain BUY on ITD Cementation - Gradual recovery shaping up - HDFC Securities

Techno Electric & Engineering - Strong margins, healthy growth outlook - ICICI Securities

Time Technoplast - Outlook upbeat; execution remains key - ICICI Securities

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

disclaimer copyright © 2005 - 2020