Consumer Durables share price target

1QFY21 performance is likely to impacted due to lockdown, disruption in supply chain and lower demand. Sales and PBT is expected to decline by 26.9% and 39.2% respectively (-3.8% and -14.9% in 4QFY20). EBITDA margins to contract 350bps on account of negative operating leverage. Adj PAT to decline 32.7%. Britannia and Nestle will be only players showing double digit sales growth and profits, most other companies will report decline in profits. Due to high overhead and loss of business, we estimate JUBI will report a loss of Rs510mn during 1QFY21. We expect sharp decline in profits of companies with discretionary spends...

1QFY21 performance is likely to impacted due to lockdown, disruption in supply chain and lower demand. Sales and PBT is expected to decline by 26.9% and 39.2% respectively (-3.8% and -14.9% in 4QFY20). EBITDA margins to contract 350bps on account of negative operating leverage. Adj PAT to decline 32.7%. Britannia and Nestle will be only players showing double digit sales growth and profits, most other companies will report decline in profits. Due to high overhead and loss of business, we estimate JUBI will report a loss of Rs510mn during 1QFY21. We expect sharp decline in profits of companies with discretionary spends...

subdued due to high incidence of Covid-19 cases and 2) complete washout in critical days of sale for seasonal products like RAC, Air coolers and fans etc. We Crompton Greaves Consumer Electricals expect Sales/EBITDA/PBT decline of 50.6%/67.3%/72.7% across our coverage...

subdued due to high incidence of Covid-19 cases and 2) complete washout in critical days of sale for seasonal products like RAC, Air coolers and fans etc. We Crompton Greaves Consumer Electricals expect Sales/EBITDA/PBT decline of 50.6%/67.3%/72.7% across our coverage...

Revenue growth across the board was impacted as COVID-19 led lockdown impacted peak sales period.

Valuations arop on account of uncertain demand: The pandemic had even shaken the defensive sectors in the past month.

Two companies, Havells India Ltd. and Blue Star in consumer durable space have reported Q4FY20 results.

To assess impact of the third phase of the lockdown in India on the room air conditioner (RAC) industry, we interacted with various stakeholders and attended several conference calls.

4QFY20 Preview: Appliances cos have seen strong growth in Jan-Feb (particularly for RAC) in anticipation of supply constraints from China in peak season. However, Covid-19 led lockdown has resulted in revenue loss for the last 10-12 days of March. Generally, March is important for channel filling for summer driven appliances. Thereby, it has higher weightage for the quarter. Covid-19 has taken away the advantage of healthy pre-buying by the distributors. Our coverage universe is expected to post 6/9% revenue/EBITDA decline in 4QFY20 (+13/-6% in 4QFY19, -2/-1% in 3QFY20). Covid-19 impact on cooling products: We believe Covid-19 will have massive impact on cooling appliances (RAC, Air Cooler, Fan, Stabilizer) for summer-2020. Lockdown being in the peak season has already impacted channel filling opportunity in March along with consumer demand in the last 15-20 days. Summer started late this year (by 10-15 days) but extension of lockdown will have significant impact on the demand. Transportation, installation and financing will be key challenges even after govt. opens the lockdown gradually. Thereby, we foresee bleak outlook for cooling products for summer-2020

We expect apparel sector to be most significantly impacted by COVID followed by QSRs and grocery retailers. Weak demand will bring down overall volumes of the business in FY21E. Companies will prioritize stabilizing existing business over installing new ones. Hence, we expect drastic decline in store addition rates and SSSG in FY21E. We expect DMART to face significant challenge to re-gain normalcy in business as the company will have to ensure minimum customer per store to address social-distancing. In 4QFY20, except DMART, all other retailers will face contraction in PAT due to high fixed cost. At current prices, our top picks are JUBI and Trent....