Consumer Sector Q4 Results Preview: No Uptrend In Demand; Margin Pressure To Sustain — Motilal Oswal

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Motilal Oswal Report

In Q4 FY25, demand trends across various categories remained stable. Staple companies are likely to experience a similar subdued quarter due to sluggish urban demand and high palm oil prices impacting the personal-wash portfolio (grammage reduction). We have seen no material pickup in volume growth, and expect revenue growth to remain in low to mid-single digit.

While companies have taken pricing actions to counter raw material inflation, revenue growth is expected to see improvement vs. witnessed in Q3 FY25. Paint companies are still struggling with a lack of demand recovery and increased competition. However, some improvement is expected in the price and product mix, as the 3-4% price cuts implemented last year have now been into the base. Additionally, companies have implemented a ~2% price hike in YTD FY25, which should support realizations.

Alcoholic beverage companies performed better, with United Spirit Ltd.'s P&A portfolio benefiting from premiumization and policy changes in Andhra Pradesh. United Breweries Ltd. is also likely to deliver high single-digit revenue growth, driven by an improved state mix, a price hike in Telangana (mid-February), and ongoing premiumization.

Innerwear companies are expected to see high single-digit growth due to summer inventory buildup and favorable base effects, although weak urban demand remains a challenge. The pressure from high trade inventory has eased, and primary growth is expected to align with secondary growth.

QSR companies saw a minor improvement in demand in Q4, with volume-led same-store sales growth showing improvement. With a favorable base, SSSG is expected to continue improving in Q4 and beyond. The revenue gap between dine-in and delivery is expected to narrow as the dine-in footfall improves. Jewelry demand has moderated due to a sharp rise in gold prices, impacting sales in Feb-25 and Mar-25 after a healthy Jan-25.

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