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Prabhudas Lilladher Report
Demand softness witnessed towards end of the quarter, due to commodity price correction (~10-15% in June month) and offset of summer season.
Overall companies have been reluctant in taking price hikes. Although commodity cost correction has begun, our channel check indicate that further price hike will be inevitable going forward.
Rural demand remains weak. We expect our consumer durables universe to register sales growth of 70% YoY (low base due to Covid second wave).
With sustained raw material inflation, inability to increase prices due to weak demand and return of some discretionary costs, we expect margins to remain under pressure (up 10 basis points QoQ) for our coverage universe.
We expect Ebitda/profit after tax growth of 98%/ 103% YoY (low base due to Covid second wave) across our coverage universe. Although we remain structurally positive on long term prospects, we see demand headwinds due to high inflation in near term.
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