Consumer Sector Check - Sequentially Some Positives On The Ongoing Input Cost Inflation: Nirmal Bang
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Nirmal Bang Report
In our recent note, we had dwelled upon how consumer companies had to resort to cost savings in FY21 to counter the dual impact of supply chain and demand disruption in H1 FY21 followed by sharp inflationary pressures in H2 FY21 which continued in Q1 FY22 as well.
Through our ‘input cost monitor’, we now highlight the current trends in key raw materials for our coverage companies (across FMCG, paints, alco-bev and quick service restaurant sectors).
Following a rough Q4 FY21 in terms of gross margins, the inflationary impact worsened in Q1 FY22, but we believe that gross margins have probably bottomed-out or are inching closer to the bottom, especially for consumer staples and paint companies due to lower QoQ inflation, benefit of price hikes already taken and mix improvement.
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