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Prabhudas Lilladher Report
We estimate our coverage universe (excluding ITC Ltd.) to report sales, Ebitda and profit after tax growth of 12.2%/18.1%/20.0% YoY (9.2%/14.7%/17.6% including ITC) due to lower priced inventory coming into usage, reduced pressure in low unit packs and tactical price cuts.
Asian Paints Ltd., Britannia Industries Ltd., Hindustan Unilever Ltd., ITC, Nestle India Ltd., Pidilite Industries Ltd. and Westlife Foodworld Ltd. will have strong Q1 while Jubilant Foodworks Ltd. will have tepid performance.
Consumer demand and sentiments improved during Q1 FY24 as rural demand for staples saw a pick up on a low base supported by price cuts/grammage increases while urban demand remained steady.
Demand across discretionary categories like quick service restaurant, apparel, footwear and retail remained under pressure while paints and jewelry sales bucked the trend.
We expect wide demand variations across home and personal care, food, QSR, jewelry, apparel, footwear and paints etc. We remain structurally positive on Westlife Foodworld, Britannia, HUL, Avenue Supermarts Ltd., ITC and Titan Company Ltd. given sustainable competitive advantage and business moats.
However, valuations have factored in green shoots in rural demand, lower raw material prices and margin expansion. We rate DMart and Titan as top picks.
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