Consumer Sector Check - Further Price Hikes Initiated In Q3 But Inflation Has Not Yet Abated: Nirmal Bang
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Nirmal Bang Report
Discussion on ‘Inflation’ took centre-stage in the Q2 FY22 earnings call of consumer companies because of the unprecedented level of inflation seen in input materials along with packaging (corrugated boxes, laminates, etc.) and logistics (fuel) costs.
Companies across sub-sectors have already taken various measures, including maximum retail price hikes (usually a last resort) to combat the input cost pressure and reduce the impact on margins.
But, as per data available till date, we have seen inflationary trends persist in Q3 FY22 as well. As per various media reports, companies have taken further price hikes during the ongoing quarter.
Indication of another round of price hikes was already given by some companies in Q2 FY22 earnings call itself. While these actions will help reduce some pain and concerns about near term margin pressure will start receding now, we believe it won’t be adequate to offset the entire pressure in Q3 FY22.
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