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Prabhudas Lilladher Report
Our interaction with industry experts and channel partners indicate that domestic industry will likely post subdued performance in Q2 FY23 (expected to grow at mid-single to low double digit YoY) (oru estimate: 14% YoY revenue growth) primarily led by-
uneven distribution of monsoons causing miss in spraying activities, thereby resulting in lower volume growth and
higher carry-over inventory during the quarter.
Despite industry taking price hikes to the tune of 4-5% (at portfolio level during Q1 FY23) for partially offsetting higher raw material cost and rupee depreciation, we believe falling raw material prices from July 2022 (on month-on-month basis) amid a high cost carry-over inventory may likely impact gross margins.
We expect absolute Ebitda for our coverage universe to be up 5% YoY backed by higher revenue growth (led by price hikes), however Ebitda margins will likely be under pressure due to lower gross margins and higher other expenses (advertisement and promotional expenses- first normal year of operations post Covid-19 restrictions).
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