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

On analyzing the heat waves in past three decades (FY92-FY22) and revenue growth of summer product companies (Fan, Cooler, Air conditioner, Refrigerator), we note the data does not indicate any such trend that revenue growth in heat wave years is higher than non-heat wave years.