Consumer Sector Q3 Results Preview - Motilal Oswal Projects Mixed Trends; Says Jewelry, Liquor To Outperform

Among our coverage companies, Marico, United Spirits, Jubilant FoodWorks, Kalyan Jewellers, and PN Gadgil are expected to be outliers in Q3 FY25, whereas Asian Paints, Indigo Paints, Godrej Consumer Products, HUL and Dabur will likely be the underperformers..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.In our consumer coverage universe, all segments, except paint, are expected to deliver revenue/Ebitda growth YoY in Q3 FY25 – staples +5%/+4%, liquor +12%/+19%, innerwear +10%/+16%, QSR +18%/+14%, and jewelry +31%/+21%. The paint segment is expected to post a decline of 1%/12% in revenue/Ebitda. Consumption trends were mixed in Q3. Staple companies are likely to witness a muted quarter amid sluggish urban demand, weak uptake for the winter portfolio, and high palm oil prices impacting the personal-wash portfolio (grammage reduction). Paint companies are impacted by a delayed monsoon and an early festive season. Demand has remained soft after the festive season and Q3 is expected to remain weak across companies. Value growth will continue to lag volume growth (price cut impact will be in the base after Q4). Liquor companies are expected to clock strong growth, led by a new liquor policy in Andhra Pradesh, positive demand for Prestige and Above, and a higher number of weddings in H2 FY25. Innerwear companies saw positive demand trends in the festive season. Traditional channels remained sluggish, while emerging channels continued to drive growth and improve the sales mix. As high trade inventory pressure has eased, primary growth is expected to rise in H2 FY25. QSR companies saw minor improvement in demand in Q3, particularly at the quarter end, with volume-led same-store sales growth improvement. With a favorable base, SSSG is expected to improve in Q3 and beyond. The revenue gap between dine-in and delivery is expected to narrow down, with improvement in dine-in footfall. Jewelry companies continued to enjoy robust growth with strong SSSG. Most companies are expected to deliver flat SSSG QoQ. Store expansion will further boost revenue growth.With high commodity prices (particularly in agri basket) and insufficient price hikes, gross margin is expected to see pressure for most categories/companies. Staple companies are expected to limit advertising and promotion spends to maintain Ebitda margin. While QSR and paint companies may see Ebitda margin contraction, liquor and innerwear companies are expected to see Ebitda margin expansion (softening raw material and improving mix). Jewelry companies would see margin pressure, but that is largely due to business model change (more franchise-driven store expansion). Studded mix will be critical for underlying margin. Among our coverage companies, Marico, United Spirits, Jubilant FoodWorks, Kalyan Jewelers, and PN Gadgil are expected to be outliers in Q3 FY25, whereas Asian Paints, Indigo Paint, Godrej Consumer Products, HUL and Dabur will likely be the underperformers. We continue to like HUL, Godrej Consumer, Dabur (despite near-term soft earnings) as we do not see much downside risk and expect a better operating print in the coming quarters. We like Page Industries and PN Gadgil on earnings improvement expectation. For Jubilant FoodWorks and United Spirits, we are constructive on business improvement, but we remain Neutral on rich valuations..Click on the attachment to read the full report:.IT Sector Q3 Results Preview - Seasonality To Weigh On Performance; TCS Gets 'Hold' Among Others By Systematix.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Consumer Sector Q3 Results Preview - Motilal Oswal Projects Mixed Trends; Says Jewelry, Liquor To Outperform

Motilal Oswal continues to like HUL, Godrej Consumer, Dabur despite near-term soft earnings as it do not see much downside risk and expect a better operating print in the coming quarters.

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Consumer Sector Q3 Results Preview - Motilal Oswal Projects Mixed Trends; Says Jewelry, Liquor To Outperform

Motilal Oswal continues to like HUL, Godrej Consumer, Dabur despite near-term soft earnings as it do not see much downside risk and expect a better operating print in the coming quarters.

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