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ICICI Securities: India’s Consumer Staples And Discretionary Sector - Q1 Earnings Review

ICICI Securities: India’s Consumer Staples And Discretionary Sector - Q1 Earnings Review

Neelam, waits in her store, Pal Stores, in New Delhi. (Photographer: Sanjit Das/Bloomberg News)
Neelam, waits in her store, Pal Stores, in New Delhi. (Photographer: Sanjit Das/Bloomberg News)

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

This is not a template-based results review report (of aggregate performance, charts Et al). This is a portfolio manager summary of the under-appreciated, yet very important takeaways from the 1QFY21 results season.

Nestle India Ltd. (flat volumes) underperformed Britannia Industries Ltd. (22% volume growth) despite both companies (likely) benefiting from in-home consumption tailwind.

We believe this is due to Britannia’s agility and better execution versus disruption in Nestle’s long supply chain (for example, EveryDay dairy whitener is manufactured in Moga, North India (whereas key consumption markets are North East and Kerala), infant food manufactured in Moga and Samalkha, North India, whereas consumption is pan India).

Hindustan Unilever’s nutrition business (predominantly Horlicks) grew just 5% in comparison to Dabur India’s Chyawanprash growth of approximately 7 times. We are fully cognizant that these are strictly not comparable.

Given the health positioning/consumer perception (in strongholds of South and East India) of Horlicks, a significant surge in revenues (though one-off) may have confirmed the (assumed to be high) brand equity scores.

Click on the attachment to read the full report:

ICICI Securities Consumer Sector Update.pdf

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