Consumer Durables share price target

Both Titan and Kalyan reported decent demand prints in 4QFY23 update. Titan’s jewellery revenue growth of ~23% YoY was higher compared to Kalyan’s (standalone) revenue growth of ~16% YoY. We believe the base quarter for Tanishq (on like-to-like basis) has been more severely impacted by Omicron-led disruptions (vs Kalyan) as Tanishq's retail presence is over-indexed in non-south and metro cities.

In this report we attempt to identify pockets of likely short-term outperformance in apparel retail sector from the near-term perspective in light of inflation, high interest rates and general slowdown in discretionary consumption.

The dealer count has likely increased 2x in last 3-4 years in Chennai. While it has resulted in higher paint sales, it has impacted revenue/dealer - that's the insight from our conversation with the paint dealers in Chennai.

Green shoots visible in rural markets (~40% of FMCG industry volumes) after a prolonged slowdown; policy measures to lend a further boost

We model three scenarios for Grasim as (1) it succeeds and gains market share of 20% by FY30 but hurts industry EBITDA margin by 150bps, (2) Moderate success for Grasim with 10% market share by FY30 and industry EBITDA margin decline by 250bps and (3) Grasim fails to gain market share more than 5% by FY30 but indulges in price war and hurts industry EBITDA margin by 400bps.

India's decadal per capita power consumption grew 3.6% vs. the long-term mean of 6% and ~14% post-liberalisation