(Bloomberg) -- Patanjali Ayurved Ltd.'s headwinds are Dabur India Ltd.'s tailwinds.
That's what Credit Suisse Group AG analysts Arnab Mitra and Rohit Kadam conclude in a note on Indian consumer players. Dabur stands to benefit the most from Patanjali's slowing sales growth, while Colgate-Palmolive India Ltd. will also gain, though with a lag, they said as they raised the two stocks to outperform from neutral.
Quarterly earnings at both Dabur and Colgate India beat analyst estimates, and revenue will jump by more than 10 percent in the next financial year, according to estimates compiled by Bloomberg. Bloomberg Intelligence analyst Catherine Lim sees the potential for improving sales at some consumer-goods companies as India seeks to boost rural incomes.
A drop in advertising spending and media buzz are among the factors responsible for Patanjali's brand fatigue, the Credit Suisse analysts wrote. The company is facing flat sales gains for fiscal 2018 after a 100 percent compound annual growth rate for the past four years. Its honey and hair-care products are not doing as well, and even strong categories such as toothpaste are plateauing, they said.
To contact the reporters on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net;Abhishek Vishnoi in Singapore at avishnoi4@bloomberg.net
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Cecile Vannucci, Teo Chian Wei
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