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Motilal Oswal Report
For the 19 consumer companies under our coverage, we expect cumulative Q3 FY23 growth of up 9.3% in topline, up 9.6% in Ebitda, and up 8.1% in profit after tax. The three-year sales/Ebitda/profit after tax compound annual growth rate is 12.9%/9.6%/7.0%, with Ebitda growth and profit after tax growth lagging sales growth because of persistent material cost pressure.
In terms of volume growth and revenue growth, our fast moving consumer goods universe is likely to see another subdued quarter in Q3 FY22, especially as rural demand remains weak.
While some categories such as biscuits and cigarettes are showing signs of demand resilience, other categories such as paints/adhesives/innerwear are showing signs of lower growth on a very high base of the past couple of years.
Going forward, weak rural sales growth from Q4 FY22 may result in optically better growth from Q4 FY23 onward, but on-the-ground rural demand is still adversely affected by inflationary pressures.
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