Consumer Durables share price target

FMCG companies witnessed strong headwinds post demonetisation (DeMo), which reflected in their 3QFY17 numbers. Although the DeMo impact from the demand point of view has nearly vanished, wholesale channels and rural market growth continued to be challenging in 4QFY17. Most of the FMCG companies witnessed a minor impact of DeMo in 4QFY17 too. However, a complete recovery is expected starting 1QFY18.

and net profit growth of 6.4%, 6.6% and 9.6%, respectively for the quarter ended March 31, 2017. The Benefiting from benign commodity prices, the consumer companies witnessed sharp increase in quarter is expected to be better in terms of growth compared to the previous quarter, as the adverse gross margins over the past few years as they did not pass on the benefit to the consumers. This effects of demonetisation drive wane. While wholesale channel continues to reel under pressure, enabled them to increase their A&P; investments before passing on some benefits to the bottom-line. other distribution channels have posted smart recovery in past three months due to improved circulation of new currencies. Although revenue growth numbers are expected to be better vis--vis...

Demand to Recoup, Demonetization Shock Absorbed

unsettling new policy that instantly shook up the lives of 1.25 billion people, rich and poor alike. On November 8th, India's Prime Minister Narendra Modi announced that on the stroke of midnight all 500 and 1,000 rupee notes 86% of the currency in circulation would cease to bec become legal tender. As the clock ticked down to midnight, a huge portion of Indian society at once found themselves deprived of the ability to transact seamlessly. At that point, upwards of 95% of all transactions in India was conducted in cash and 90% of ve vendors did nott have the means to accept anything but cash....

Consumer: 3QFY17E Results Preview

GST slabs unveiled; FMCG to get a push... The five-rate tax structure of the most awaited economic reform in India, Goods and Services Tax (GST), was unveiled on November 3, 2016. The government has come out with a five rate tax structure of 0%, 5%, 12%, 18% and 28%. While 50% of CPI items are exempted from GST, the lowest rate of 5% would broadly comprise mass consumption items, including edible oil (marginally positive for Marico's edible oil portfolio). The government has proposed to keep two standard rates - 12% & 18%,...

In Q2FY17, we do not see a major revival in growth for most consumer companies as the factors responsible for sluggish growth in the last few quarters, like rural stress, liquidity crunch, and subdued macro-environment, continue to impact growth. For consumer companies (ex-Nestle), we expect topline to grow by 8% yoy in Q2 vs. 5%/5%/6% in the previous three quarters and bottomline to grow by 11% vs. 9%/7%/10% in previous three quarters. We believe that the minor improvement in growth rates will be due to a favourable base for companies impacted by excise benefit cessation in FY16, mild revival in ITC's cigarettes business, and gross margin expansion for categories consuming cruderelated raw materials....

After the dismal show in the last two quarters (PC consumer sector PAT grew by 7% each in Q3/Q4 FY16), we see PAT growth reviving with 11% growth in Q1FY17, even with the continued slowdown in the rural growth. We believe the improvement in growth rates will be due to a favourable base for companies impacted by excise benefit cessation in FY16, mild revival in ITC's cigarettes business, and gross margin expansion for categories consuming crude-related raw materials. It must be noted that from Q1FY17, all companies in PC Consumer Universe (except Bajaj Corp, Agro Tech Foods and Apcotex) will have to report results in IND AS format. This entails...

Impact of normal monsoons on rural growth is over estimated: As per Skymet and IMD, India will receive normal to above-normal monsoons this year. While a good monsoon is always good for economic growth in rural areas, its contribution to rural growth acceleration...