Consumer Durables share price target

As per data released by Bizom, the sales of the FMCG sector in Q1FY24 saw a decline of 4.6% YoY, after seeing a growth of 14.1% YoY in Q4FY23E and 7.8% YoY in FY23E. For Q1FY24, rural and urban were both lower and declined by 4.6% YoY and 4.7% YoY, respectively.

In this report, we present a primary survey of 19 footwear brands – Puma, Campus, Metro, Mochi, Bata, Adidas, Nike, Reebok, Fila, Crocs, among others – covering 21,000 SKUs to assess the degree of discounting in the ongoing EOSS.

Our interaction with channel partners and managements indicate likely volume growth in early teens in 1QFY24e. We believe delayed monsoon has allowed for higher paintable days vs base quarter. It has also likely resulted in higher revenues of exterior paints and waterproofing.

Both Titan and Kalyan reported strong demand prints in 1QFY24. Kalyan’s India jewellery revenue growth of ~34% YoY was higher compared to Titan’s jewellery (standalone) revenue growth of ~21% YoY.

Our primary research (survey) indicates current EOSS (end of season sale) has kicked off two weeks early (likely) due to general business slowdown. We believe higher discounts are reflective of relative stress in underlying inventory, and hence, may be a leading indicator of business performance in near term.

We note most durable companies are introducing a new brand via acquisitions or new launch. We believe the strategy of sub-segmentation to be DCF accretive and note (1) new brand will allow to expand product portfolio in different segments such as kitchen.

Grasim has introduced painting services in Mumbai and Pune markets under the brand ‘Sparkle’. In our opinion, it will allow Grasim to develop consumer insights. As of now, Grasim is likely to use products from competing companies.

Post our interaction with companies and channel partners, we note (1) the revenue growth is still muted in Apr-May’23. Unseasonal rains in North India in Apr’23 has impacted off-take of summer products, (2) the trade schemes as well as consumer offers are higher than earlier quarters.

Wood panel companies under our coverage reported a mixed bag of operating performance in Q4FY23 with Century Plyboards (CPBI) surprising positively. Plywood and allied segment revenue for CPBI and Greenply Industries (MTLM) grew 18.4% and 3.1% YoY, respectively (4-year CAGR of 14.5%/5.6%).