Consumer Durables share price target

Top picks in FMCG: Jubilant FoodWorks and Marico Broad-based slowdown: Our FMCG coverage universe is expected to deliver 9/9% YoY revenue/EBITDA growth in 1QFY20 (vs. 15/18% in 1QFY19 and 9/8% in 4QFY19). Rural stress continues with growth now at par with urban growth (vs. 1.2-1.3x urban in FY19). Low farm incomes, tight liquidity and weak consumer sentiments have dented demand. Slowdown is prevalent across categories with exceptions like summer products (juices, ice cream etc). We believe stronger players (HUL and BRIT) will gain healthy market share in a challenging period.

Uncertainty around demand and focus on inventory liquidation of last year had deferred price hikes in RACs, but with strong demand uptick, brands have taken selective price hikes though ASPs will still be lower than last year due to sustained competitive intensity. Our channel checks and industry interactions suggest that industry can clock ~15% volume growth in Q1FY20E on a favorable base from last year. Stable commodity prices...

Top picks in FMCG: Jubilant FoodWorks and Marico Our FMCG coverage universe is expected to deliver 11/12% YoY revenue/EBITDA growth in 4QFY19 (vs. 10/15% in 4QFY18 and 12/11% in 3QFY19). Highly anticipated acceleration in rural demand is delayed despite Govts fiscal stimulus drive and run-up to general elections. Rural growth is now growing at par with urban vs. recent peak of 1.3x and long term average of 1.5x. As per management commentary, liquidity in rural markets has not spiked as expected during the run-up to general elections, hence acceleration in consumption did not come through. On the other hand, urban growth continues to be healthy driven by robust growth in modern trade and e-commerce.

Mold Tek Packaging Food & FMCG put up a good show Mold Tek Packaging (MTEP) reported Q3 results, in line with expectations. Cons. net sales grew by 15.7% YoY but marginally lower QoQ to Rs 987m. EBITDA grew 10.6% YoY and 1.7% QoQ to Rs 169m due to lower opex and improved gross margins (39.5% in Q3 versus 38.9% in Q2). EBITDAM also improved 60 bps QoQ to 17.1% but still remained 80 bps lower YoY. There was a sharp increase in the depreciation and interest cost by 18.9% and 70.2% YoY respectively due to the capex at Vizag and Mysuru. PAT stood at Rs 76m, up 12.6% YoY and 5.3% QoQ on...

Mold Tek Packaging Food & FMCG put up a good show Mold Tek Packaging (MTEP) reported Q3 results, in line with expectations. Cons. net sales grew by 15.7% YoY but marginally lower QoQ to Rs 987m. EBITDA grew 10.6% YoY and 1.7% QoQ to Rs 169m due to lower opex and improved gross margins (39.5% in Q3 versus 38.9% in Q2). EBITDAM also improved 60 bps QoQ to 17.1% but still remained 80 bps lower YoY. There was a sharp increase in the depreciation and interest cost by 18.9% and 70.2% YoY respectively due to the capex at Vizag and Mysuru. PAT stood at Rs 76m, up 12.6% YoY and 5.3% QoQ on...

VGRD reported in-line revenues in Q3, driven by the Consumer Durables and Electronics segment, while the Electrical segment's revenues increased only marginally (+3.2%) due to the weak performance of the Wires and Pumps segment. Consumer Durables segment growth was supported by strong volumes in Fans and Water heaters. The Electronics segment (+17.4%) has made a comeback after nearly four quarters of muted growth, with equal contributions from Stabilizers and UPS. by an expansion into the non-South markets and the introduction of new product categories. However, we have blended in a 13% revenue CAGR from FY18-21E....

Crompton reported in-line revenues, driven by the Electrical Consumer Durable segment, while revenues of the Lighting segment declined (-2.4%) on a reduction in EESL revenues. Excluding EESL, the Lighting segment's revenues rose 18% yoy. Growth of the ECD segment was driven by launches in the Decorative fans category, Geysers, further deepening reach of Crest Mini pumps, and the GTM strategy implementation. The sequential margin improvement in Lighting was in line with management's focus to recoup margins; the target is to return to double-digit lighting margins within next two quarters....

Top picks in FMCG: ITC, Dabur and Jubilant FoodWorks Consumer sentiments continue to be positive: Our FMCG coverage universe is expected to deliver 11/13% YoY revenue/EBITDA growth in 3QFY19. We believe earnings growth is healthy, given that favorable base now evades (13/17% YoY in 3QFY18) and the last leg (Sep-18) of monsoons were weak. Although, cos will enjoy festive benefits in 3Q instead of 2Q, festive sales were tepid and hence we dont expect robust incremental growth. Rural demand continues to outpace urban in the last 6qtrs. CSD channel (5-6% of FMCG revenues) is recovering from the impact of biometrics implementation, while MT (10% mix) and E-commerce (2% mix) continue to be the growth engines in urban markets. Pricing actions have returned in the sector (1-2%) owing to sharp commodity inflation during 2Q. However, with a reversal in crude prices coupled with INR appreciation, we dont expect another round of price hikes in 4QFY19 instead cos should benefit from GM expansion in 4Q assuming ceteris paribas

The government has imposed higher duty to curtail imports of finished consumer durable products i.e. room air conditioners (RAC), refrigerators (RF) and washing machines (WM).