FMCG 3QFY15E Results Preview :: HDFC Securities

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There is no visible pick up in the demand environment in 3QFY15.
The gap between urban and rural growth continues to shrink, with
rural growth persistently moderating. HDFC securities expects
volume growth for paint companies (esp. Asian Paints and Berger)
to be in the range of ~11% in domestic decorative paints. Volume
growth expectations for the others are: Colgate (+7%), Dabur (+8%),
Emami (+9%), HUL (+6%), ITC (-5%) in cigarettes, Nestle (+3%),
Pidilite (+10%) and Marico (+8%).
 Key RMs (Crude, Palm oil, Menthol, LLP, TiO2, LAB, HDPE, VAM, etc)
have softened, which will aid gross margins in 3QFY15. Most
companies have increased their brand spends with an intention to
capitalize on the much anticipated urban revival (we expect
recovery in FY16E).
 As the focus has shifted beyond FY15E, weak 3QFY15 nos. may not
lead to a sharp correction.
 Earnings expectation have factored a moderation in growth in select
categories, but valuations seem to completely ignore the emerging
risks. We prefer Asian Paints and Berger Paints on account of their
demand growth visibility and collapse in crude prices.

LINK
http://www.hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3010605