Consumer Sector Q1 Preview - Gradual Volume Improvement For Staples, Margin Pressure For Paints: Systematix

Systematix Research Report

With no significant change yet in the underlying demand trends from Q1, we expect another quarter of steady revenue growth for consumer staples and soft like-for-like growth for discretionary names.

Sequentially, we expect a marginally better trajectory for staples with the negative pricing impact reducing with price cuts in the base and the rural/summer portfolios doing well, while growth in discretionary names should be driven by footprint addition, with LTL growth remaining sluggish given lesser wedding dates and the heat wave restricting footfalls.

Given the steady external environment and aggressive promotions and price cuts by companies, we expect some improvement in volume growth trajectory with mid single digit volume growth in most staples names.

Discretionary names are expected to see better growth rates than staples but that is on account of a lower base and higher footprint addition.

Margins for staples should be marginally better given higher marketing spends offsetting some gross margin improvement while margins for discretioanry names are expected to remain weak given the early onset of 'End of season sale', negative operating leverage and softer growth in premium compared to value categories.

Paint companies are expected to deliver a double-digit volume, low single digit revenue growth with higher advertising and promotion spends driving margin contraction.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.