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Motilal Oswal Report
We expect Q2 FY23 to report strong cumulative growth numbers – up 16.7% on topline, up 13.6% on Ebitda, and up 12.9% on profit after tax – for the 19 consumer companies under our coverage universe.
Three-year sales/Ebitda/profit after tax compound annual growth rate is 12.7%/9.1%/5.2%, respectively.
Sales growth in Q2 FY23 will largely be led by price hikes as volumes for most categories remain negatively impacted by grammage reduction, high consumer price index inflation, and a sustained slowdown in rural demand.
However, the prices of key commodities such as crude and palm oil have eased in the recent weeks, but they are unlikely to benefit margins in Q2 FY23 as the decline came in only towards the end of the quarter.
We expect companies to take sharp price cuts to pass on the benefits of lower input costs to consumers and boost volumes in H2 FY23.
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