FMCG, Retail Q3 Results Preview - Demand Slowdown Will Weigh On Topline: Axis Securities

Signs of revival in rural, softening of raw material prices will be the key triggers for the revival of entire consumer sector.

<div class="paragraphs"><p>A lady shopping at a supermarket. (Photo: Bernard Hermant/Unsplash)</p></div>
A lady shopping at a supermarket. (Photo: Bernard Hermant/Unsplash)

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Axis Securities Report


Volume growth for most of the staple companies (excluding ITC Ltd.) under our coverage will be in the low to mid-single digits as early stocking ahead of the festive season led to limited stocking by the retailers in the first half of the quarter, while revenue growth will primarily be price-led (price hikes undertaken to offset the impact of high inflation in the past).

Rural demand growth which was hampered in the last several quarters witnessed some revival towards the end of the quarter. However, the sustenance of rural growth will define future growth momentum.


After a strong run-up in the last several quarters, paints company are likely to report a sharp fall in revenue as a combination of factors –

  1. Subdued demand environment on account of high inflation,

  2. limited opportunity for further market share gains, and

  3. decline in pent-up demand.


We expect the topline of most of the retail companies to report strong doubledigit growth in Q3 FY23, led by festive demand, store expansion, increase mobility, and social gatherings. Having said that retailers that have a presence in metros/ tier-I towns are likely to fair well vis-a-vis retailers in tier-II/III towns as these towns continue to remain under pressure due to high inflation.

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Axis Securities FMCG Retail Q3FY23 Earnings Preview.pdf
FMCG Q3 Results Preview - Slow Pace Of Earnings Recovery In Staples: Motilal Oswal


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