ICICI Securities: Digitally Enabled Kiranas, Consolidation Of Modern Trade And E-Commerce Hurt Consumer Companies’ Margins  
An employee use a payment terminal at a supermarket in the Kurla area of Mumbai, India. (Photographer Dhiraj Singh/Bloomberg)

ICICI Securities: Digitally Enabled Kiranas, Consolidation Of Modern Trade And E-Commerce Hurt Consumer Companies’ Margins  

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

We believe that consolidation of general trade channel (wholesale), modern trade and e-commerce is unlikely to impact consumer companies’ operating margins.

We draw parallel from Procter and Gamble Hygiene and Healthcare Ltd.’s global partnership with Walmart, a renowned global case study in partnerships.

Though Walmart accounts for one-third of P&G U.S.’ sales, it’s margins in this channel is likely higher (our view) thanks to consumer behavior data sharing and supply chain collaboration.

Furthermore, high Herfindahl-Hirschman Index (greater concentration of market shares with few brands) in most consumer categories in India allows strong negotiation power for the brands/market leaders.

That said, markets like simple narratives and that’s the risk to FMCG stock multiples.

Click on the attachment to read the full report:

ICICI Securities Consumer Narrative Vs Reality.pdf

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