Consumers Q3 Review: Britannia Industries, Godrej Consumer, Tata Consumer among top picks of Sharekhan
- Stock Market Today: The Q3FY24 performance of Consumer companies was impacted by weak demand. Britannia Industries, Godrej Consumer Products, Tata Consumer Products, Jyothy Labs, Heritage Foods, Mrs. Bectors Food and Varun Beverages are the top picks of Sharekhan post Q3 results
Britannia Industries, Godrej Consumer Products, Tata Consumer Products, Jyothy Labs, Heritage Foods, Mrs. Bectors Food and Varun Beverages are the top picks of Sharekhan post Q3 results
The financial performance some companies stood out and Jyothy Laboratories, Radico Khaitan, Varun Beverages and Nestle India were among Leaders for Q3FY2024, as per Sharekhan
Laggards for Q3FY2024 howver included Zydus Wellness, Hindustan Unilever and Bajaj Consumer Care as per them.
Factors that influenced Q3 performance-
Consumer companies saw impact of weak demand during the quarter impact their volumes and revenue growth while price cuts taken to support volumes further put pressure on topline growth.
The declining costs however did cushion the operating performance and earnings on companies during Q3.
The Consumer goods companies’ Q3FY2024 performance was weak with low-single digit revenue growth while higher margins led to double-digit net profit growth, said analysts at Sharekhan in their Q3 preview. Value growth for most companies under their coverage lagged volume growth as price cuts undertaken by companies led to lower realization growth. 13 companies out of 19 companies registered flat to singled digit revenue growth.
With benign input prices, gross margins of most companies under their coverage universe remained high. This also aided in Operating margins expansion and double-digit net profit growth.
Outlook -
Moving forward the Volume growth is likely to recover gradually only say analysts though they expect margins to remain high. Consumer goods companies expect sales volume to recover by Q2 or Q3FY2025 with likely support coming up from government in the budget to be declared in July-2024, said analysts. Further, international weather agencies are seeing reduction in El-Nino impact which will result in better monsoon in the current year. The monsoon conditions remain important to support the rural demand This will help rural demand to recover in another 2-3 quarters, said analysts.
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Input cost remaining stable and will continue to support profitability and will help the consumer goods companies to focus on recovering volume growth through promotional activities, new product launches and distribution expansion, say analysts.
We will continue to see small companies performing better as compared to large packs in the near term" said analysts at Sharekhan.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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