ICICI Securities: India’s Consumer Staples And Discretionary-Lower Trade Margins, Discounts, Ad-Spends Moderation Provides Earnings Succour
Various products made by Hindustan Unilever sit for sale on a store shelf in Mumbai, India. (Photographer: Prashanth Vishwanathan/Bloomberg News)

ICICI Securities: India’s Consumer Staples And Discretionary-Lower Trade Margins, Discounts, Ad-Spends Moderation Provides Earnings Succour

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

Consumer sector overvaluation, although moderated in 3M, remains high. As per I-SEC Consumer Momentum Indicator (ICMI), sector overvaluation remains high at 23% - despite having moderated from 36% in April 20. This moderation is primarily driven by underperformance versus other sectors- consumer stock basket up 3% versus Nifty over 19% and Banking Financial Services and Insurance Sectors (+ 11%), Information Technology (+36% ) and Automobiles (+31%).

Cost savings provide downside protection to earnings. Given the challenges to revenue growth, most consumer companies have been managed their costs well. We note the lower advertisement spends, both in terms of volume and per unit cost, as the key area of cost saving. Large media buyers like Hindustan Unilever have the opportunity to buy media in bulk and lock-in low rates for rest of FY21. Bajaj Consumer commented that it did not advertise on Television for 2.5 months till mid-June and Marico has guided to approximately 100 basis points saving in advertisement spends without compromising on their share of voice.

Click on the attachment to read the full report:

ICIIC Securities Consumer_sector.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.