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To showcase sluggish demand recovery in Q4FY23 - Consumer Discretionary Q4FY23
What's Buzzing
Consumer discretionary companies' Q4 performance is likely to remain muted amid inflationary pressure and lower rural demand. However, on a favourable base, paints & AC categories are likely to witness better volume offtake.
Context
We expect our consumer discretionary (CD) universe’s revenue to grow at a slower pace of 10% YoY in Q4FY23E largely driven by the paints and AC segment. Higher channel inventory and lower rural spending is likely to impact the demand recovery of small appliances. On the piping front, lower realisations is likely to offset volume growth of ~12% due to a sharp fall in PVC prices. Alternatively, intact urban demand and favourable base is likely to drive the demand for paint & AC companies. On the margin front, we believe the benefit of lower raw material costs will be offset by higher A&P expenses. CD universe's margins are likely to remain flat YoY. We expect a sequential improvement of ~100 bps supported by subsiding inventory losses and positive operating leverage.
Our Perspective
We believe the volume growth of paint companies will be supported by a favourable base and pick-up in demand for decorative paints. However, we believe realisation growth will remain muted owing to higher demand for lower end products. While AC players are likely to benefit from seasonal demand for ACs, demand for small appliances is likely to remain muted due to higher channel inventory in the fan segment and lower rural demand. Going forward, we believe easing inflationary pressure, rationalising channel inventory and pick-up in construction activities are likely to drive demand in the CD sector.
|
Company |
Revenue |
Change (%) |
EBITDA |
Change (%) |
PAT |
Change (%) |
|||
|
Q4FY23E |
YoY |
QoQ |
Q4FY23E |
YoY |
QoQ |
Q4FY23E |
YoY |
QoQ |
|
|
Asian Paints |
8,679.3 |
10.0 |
0.5 |
1,655.9 |
14.7 |
2.8 |
1,111.3 |
27.1 |
1.3 |
|
Berger Paints |
2,456.9 |
12.3 |
-8.8 |
370.3 |
6.9 |
5.9 |
230.4 |
4.6 |
14.5 |
|
Kansai Nerolac |
1,558.7 |
10.3 |
-9.2 |
175.4 |
111.4 |
-7.0 |
105.9 |
331.8 |
-5.6 |
|
Pidilite Industries |
2,764.2 |
10.3 |
-7.8 |
465.6 |
16.1 |
-6.1 |
290.1 |
14.0 |
-5.7 |
|
Supreme Industries |
2,451.8 |
-4.1 |
6.1 |
367.8 |
-6.0 |
21.2 |
261.9 |
-19.1 |
24.7 |
|
Astral Ltd |
1,533.7 |
10.3 |
21.0 |
234.9 |
8.4 |
26.0 |
146.6 |
1.7 |
54.4 |
|
Havells |
4,965.1 |
12.4 |
20.5 |
558.5 |
7.3 |
31.8 |
380.8 |
7.9 |
34.1 |
|
Crompton Greaves Con |
1,854.7 |
19.8 |
22.3 |
207.2 |
-9.4 |
36.0 |
122.2 |
-30.8 |
43.3 |
|
Bajaj Electricals |
1,300.6 |
-2.5 |
-12.4 |
89.6 |
41.9 |
-11.9 |
56.9 |
47.3 |
-6.8 |
|
V-guard |
1,152.4 |
8.9 |
17.5 |
98.8 |
-11.0 |
50.0 |
63.9 |
-28.7 |
62.7 |
|
Voltas Ltd |
3,023.4 |
13.4 |
50.7 |
238.0 |
-8.8 |
211.6 |
174.3 |
-4.6 |
LP |
|
Sheela Foam |
848.9 |
11.2 |
3.9 |
103.0 |
43.4 |
36.0 |
70.0 |
42.1 |
15.6 |
|
Total |
32,589.8 |
9.6 |
6.7 |
4,565.0 |
10.3 |
13.2 |
3,014.2 |
10.4 |
23.4 |
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