Consumer Durables share price target

Consumption trends in Q4FY25E remained mixed, with staple companies expected to report marginal volume growth. Inflationary pressures on discretionary spending weighed on major FMCG players such as HUL, Nestlé India, Britannia, and Tata Consumer Products.

Demand: Est. at 4,448 tons in CY2023 (valued at $306 Bn. at average value of $1,940 per ounce) bifurcated as
primarily (a) Jewellery: 49% (b) Bars & Coins: 27% (c) Central Banks: 23%

Consumption trends in 3QFY25 were mixed, with staple companies expected to report a muted quarter due to sluggish urban demand, weak winter portfolio sales, and the impact of high palm oil prices on the personal-wash segment. YoY volume growth is expected to decline, while pricing pressures ease, leading to positive pricing for most companies.

In Q1FY25, our coverage universe reported a healthy revenue growth of 7.1% YoY, surpassing our estimates by 0.1%. This reflects an uptick in demand and consumption trends.

In Q1FY25E, we expect our coverage universe to see a healthy performance led by some improvement in volumes and stability in gross margins.
We expect revenues to see a growth of 7.0% YoY (+6.7% QoQ) led by improving demand resulting in a gradual uptick in volumes aided by improvement in rural recovery.

In Q4FY24, our coverage universe experienced a modest revenue growth of 1.8% YoY, (Est.4.2%) as demand trends remained relatively stable throughout the period. However, at the end of Q4FY24, most of the companies witnessed rural recovery, which outpaced urban growth.

Top Sector Ideas - FMCG Q4FY24

The FMCG industry has seen slower volume/ value growth in Q3FY24 compared to that seen in H1FY24. The slowdown in growth has been led by traditional trade, while modern trade has continued to see a strong growth trajectory.

Our consumer durables universe grew 25% YoY in Q3, once again led by demand for EMS, cables and wires

We followed up our Southern Sojourn with on-ground channel checks in India's eastern states of Odisha and West Bengal