Consumer Discretionary - Q2FY21 Result Preview - ICICI Securities

We expect the I-direct consumer discretionary universe to have posted a strong bounce back in demand for discretionary products (paints, pipes and electrical goods) post easing of lockdown restrictions. The growth was largely driven by semi-urban and rural India that were less impacted by the pandemic and also helped negate the impact of intermediary lockdowns in metro regions. We believe organised players have also gained market share from unorganised/regional players that were adversely impacted by supply chain disruptions amid lockdowns. Major FMEG players like Havells, Bajaj Electricals and Voltas have confirmed market share gains due to their strong supply chain management and pan-India distribution reach. Further, changing consumer habits as more people stay home due to lockdown and rise in work from home culture led the revival in demand for home appliances in urban India in July-August 2020. On the paint front, top three paint majors are likely to post ~8-9% YoY volume growth in Q2FY21, supported by strong pent up demand in both decorative, industrial paints category. The recent surge in auto OEMs sales volume and a low base of decorative paints would benefit Kansai Nerolac in terms of strong volume growth of 7% in Q2FY21E. On the piping business, we believe Supreme Industries would record a strong performance in piping (strong demand for agri, residential pipes from rural regions) and packaging segments. The I-direct coverage universe may see ~4% YoY revenue growth in Q2FY21.

Unfavourable base due to change in corporate tax rate

The I-direct CD universe is likely to see ~8% YoY growth at the PBT level due to better margins. However, the Q2FY21 bottomline would be impacted by unfavourable base on account corporate tax rate cut in Q2FY20.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_ConsumerDiscretionary_Q2FY21.pdf

Source : Equity Bulls

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