FMCG, Retail Q3 Preview – Urban Recovery To Take Centre Stage; Trent, Doms Among Axis Securities' Top Plays

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Axis Securities Report

Most fast moving consumer goods companies under our coverage universe are expected to report continued slowdown in volume growth despite the festive season. Revenue growth is likely to be impacted due to continued subdued demand in urban markets owing to deterioration in savings, food inflation, lower wage growth etc.

However, rural markets continue to see gradual recovery and the growth in rural markets is expected to outpace growth in the urban markets.

The overall revenue growth trend for the retail sector is expected to vary, reflecting a mixed-bag performance, as discretionary spending continues to remain subdued especially in urban.

Recovery in smaller towns will led to better performance for value retailers (V-Mart, D-Mart) while premium retailers such as Trent and Ethos are expected to continue their strong performance.

Quickservice restaurant players are also likely to report some recovery in same-store sales growth led by lower base alongside focus shifting towards driving top line growth over profits, through value offerings and discounts.

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