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Home / News / India /  Coming up this week: MPC minutes, FMCG results, UK inflation

Every Monday, Mint’s Plain Facts section features key data releases and events to watch out for in the coming week. The earnings season for the September-ended quarter is well under way, with top steelmaker JSW Steel and consumer goods majors Hindustan Unilever Ltd (HUL) and Nestlé India set to declare their financial results this week. The Reserve Bank of India (RBI) will release the minutes of its October policy meeting. Here are the five big events and numbers to track:

 

1. RBI meeting minutes

In a widely anticipated move, the RBI’s monetary policy committee (MPC) retained its accommodative stance in its meeting held on 6-8 October. Jayanth Varma, an external member, was once again the sole dissenter. Did other members at least begin to agree with his apprehensions on inflation? We’ll know when the central bank releases the minutes of the meeting this Friday.

RBI governor Shaktikanta Das has pledged that the policy stance will continue to support growth for now, even as the MPC made its first move towards normalization by halting securities purchases. The minutes will provide clarity on these decisions.

While the economy is fast gaining traction, the committee has retained the growth forecast for 2021-22 at 9.5%, but lowered the retail inflation projection from 5.7% to 5.3%. With the base effect keeping inflation figures deceptively low, markets will watch out for the MPC’s views on how the underlying price pressures will play out in coming months.

 

2. FMCG earnings

Three fast-moving consumer goods (FMCG) majors will announce their September-quarter earnings this week: HUL and Nestlé India on Tuesday, and Tata Consumer Products on Friday.

Most analysts expect a decent revenue growth for the sector, boosted by a low base and hikes in product prices. A revival in demand for discretionary products, which had suffered during the second covid-19 wave, will also aid growth.

However, there are concerns over profit margins as price hikes are expected to only partially offset the rise in the cost of commodities such as milk, crude oil, and edible oils, among others.

Brokerage ICICIDirect pegs 11-15% year-on-year revenue growth for the three companies. For HUL, the largest of the three, the gains could come on the back of recovery in home care and beauty and personal care segments. Investors will keep an eye on the performance of newly-acquired nutritional brands such as Horlicks.

 

3. ICICI Prudential earnings

ICICI Prudential Life Insurance is another key company that will announce its September-quarter earnings on Tuesday. The company had set a goal of doubling its value of new business (VNB) between 2018-19 and 2022-23, but this was disrupted by the pandemic. However, the company saw a strong 78% year-on-year growth in VNB in the June quarter, claiming it was on course to meet the target. A KRChoksey research report estimates 3.8% growth in VNB this time.

The growth momentum is likely to have continued in the September quarter, aided by a low base. Margins of insurance companies in general are likely to find support from the broader recovery in the economy as claims related to the covid-19 outbreak see a drop since the second wave. Investors will watch out for what India’s second-largest private insurer has to say about future goals and the industry’s outlook amid the ongoing pandemic.

 

4. JSW Steel earnings

JSW Steel, one of India’s top steel producers, will announce its September-quarter earnings on Thursday. In the previous quarter, the company had made a strong 145% year-on-year growth in its consolidated revenues, but that was on account of low-base effect. The base effect is likely to continue, with analysts pegging an over 50% y-o-y revenue growth for the steelmaker in the September quarter.

The sequential revenue gains are likely to be supported by improved realizations and increased volumes as steel-consuming sectors resumed operations after lockdowns. However, expectations of sluggish demand from construction and infrastructure activities because of monsoon rains could pose a downside risk. The company reported a sequentially flat crude steel production in the September quarter, even though it grew 29% year-on-year.

Increased costs of coking coal are likely to have raised production costs for the broader sector, not all of which the companies passed on to clients. This could put margins under pressure.

 

5. UK inflation

Recent pictures of long queues outside UK petrol stations have fuelled anxiety over alarming inflation levels as the country recovers from the pandemic. The Bank of England (BoE) has so far not budged on low interest rates, but it may now be close to becoming the first major central bank to change that. Retail prices grew 3% year-on-year in August, sharply above the BoE’s 2% target, and threatening to only soar further. The September numbers are due on Wednesday.

The inflation continues to be driven by supply bottlenecks, labour shortages, and rising energy prices. The Organisation for Economic Co-operation and Development (OECD) has even predicted that the UK’s inflation rate could stay around the 3% level for another year. If that happens, it would be the most persistent among advanced economies. This could soon start hurting households’ spending power if monetary policy doesn’t find a solution.

Optimistic employment numbers released recently may finally prompt the BoE to move in that direction. 

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