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FMCG
Mixed trend in revenue growth
Though majority of the price increases by FMCG companies were
taken until the last quarter of FY11, some companies (Dabur and
Asian Paints) took a further increase (~4-5% during the quarter).On
other hand Marico did not take any price increases, and hence the
growth will be largely volume led.
Margins to show marginal improvement
Having passed on the increasing cost pressures to consumers, we
expect margins to show a marginal improvement QoQ. However, it
would continue to remain under pressure on a YoY basis. Going
ahead, with the prices of crude oil and agricultural inputs softening,
we expect margin pressures to ease.
International business to increase contribution in revenues
With companies completing a slew of acquisitions in FY11, the
contribution of international businesses to the topline is expected to
increase almost two-fold from Q1FY12E onwards. We expect the
contribution for Dabur and Marico to increase to ~30% (Q4FY11
stood at 14.3%) and ~25% (Q4FY11 stood at ~17%), respectively.
Company specific view
Company Remarks
Asian Paints Volume growth would remain flat YoY with topline growth to be led by ~12% price
increase in FY11 and further 4.3% in May, 2011. Price hikes would help in improving
margins on a QoQ basis by ~120 bps though it would continue to remain lower YoY by
~310 bps
Dabur India With series of price increases (~6-7%) across the portfolio & increase in int'l business
contribution to ~30%, we expect topline to grow ~36% YoY.Margins would remain flat
QoQ but improve ~280 bps YoY.Higher interest (for acquisitions) would continue to keep
PAT margins low at 12% (-130 bps QoQ)
Jyothy Lab We expect standalone sales to grow ~7.5% QoQ and ~10% YoY with Ujala witnessing
~6% growth YoY and Maxo gaining traction. Also, JFSL's contribution to sales would
increase to ~5% led by acquisitions in Delhi and Mumbai. Higher interest (debt for
Henkel's acquisition) would keep PAT margins lower at ~5%
Kansai
Nerolac
Sales growth in the quarter is expected to be ~11% YoY and~12% QoQ. It would largely
be driven by higher realisations with volume growth remaining subdued. Despite passing
on cost pressures via increase in prices, margins would continue to remain under pressure
declining ~350 bps YoY to ~12%
Marico Revenue growth of ~15% YoY is expected to be largely volume led. Impact of price hikes
taken in Q4FY11 would provide marginal respite to margins (up 70 bps) QoQ. However, it
would continue to remain subdued (down 200 bps) YoY. Marico did not launch any new
products or take further price hikes in Q1FY12
Source: Company, ICICIdirect.com Research
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
FMCG
Mixed trend in revenue growth
Though majority of the price increases by FMCG companies were
taken until the last quarter of FY11, some companies (Dabur and
Asian Paints) took a further increase (~4-5% during the quarter).On
other hand Marico did not take any price increases, and hence the
growth will be largely volume led.
Margins to show marginal improvement
Having passed on the increasing cost pressures to consumers, we
expect margins to show a marginal improvement QoQ. However, it
would continue to remain under pressure on a YoY basis. Going
ahead, with the prices of crude oil and agricultural inputs softening,
we expect margin pressures to ease.
International business to increase contribution in revenues
With companies completing a slew of acquisitions in FY11, the
contribution of international businesses to the topline is expected to
increase almost two-fold from Q1FY12E onwards. We expect the
contribution for Dabur and Marico to increase to ~30% (Q4FY11
stood at 14.3%) and ~25% (Q4FY11 stood at ~17%), respectively.
Company specific view
Company Remarks
Asian Paints Volume growth would remain flat YoY with topline growth to be led by ~12% price
increase in FY11 and further 4.3% in May, 2011. Price hikes would help in improving
margins on a QoQ basis by ~120 bps though it would continue to remain lower YoY by
~310 bps
Dabur India With series of price increases (~6-7%) across the portfolio & increase in int'l business
contribution to ~30%, we expect topline to grow ~36% YoY.Margins would remain flat
QoQ but improve ~280 bps YoY.Higher interest (for acquisitions) would continue to keep
PAT margins low at 12% (-130 bps QoQ)
Jyothy Lab We expect standalone sales to grow ~7.5% QoQ and ~10% YoY with Ujala witnessing
~6% growth YoY and Maxo gaining traction. Also, JFSL's contribution to sales would
increase to ~5% led by acquisitions in Delhi and Mumbai. Higher interest (debt for
Henkel's acquisition) would keep PAT margins lower at ~5%
Kansai
Nerolac
Sales growth in the quarter is expected to be ~11% YoY and~12% QoQ. It would largely
be driven by higher realisations with volume growth remaining subdued. Despite passing
on cost pressures via increase in prices, margins would continue to remain under pressure
declining ~350 bps YoY to ~12%
Marico Revenue growth of ~15% YoY is expected to be largely volume led. Impact of price hikes
taken in Q4FY11 would provide marginal respite to margins (up 70 bps) QoQ. However, it
would continue to remain subdued (down 200 bps) YoY. Marico did not launch any new
products or take further price hikes in Q1FY12
Source: Company, ICICIdirect.com Research
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