Sector Update - Consumer Discretionary - ICICI Direct

The I-direct consumer discretionary universe will be negatively impacted by rise in key raw material prices followed by sharp rise in crude oil prices by 30% QoQ in Q4FY22. Key raw materials such as Titanium Dioxide (TiO2), vinyl acetate monomer (VAM), aluminium, high density polyethylene (HDPE), low density polyethylene (LDPE) witnessed upward movement in the range of 9% to 48% YoY. Our coverage companies have already taken price hikes in the range of 15-20% by 9MFY22 to offset the higher raw material prices. The recent surge in raw material prices will require companies to go for another round of price hikes. We believe there is limited scope to fully pass on the raw material inflation considering the steep price hike already taken. Hence, we revise our revenue, EBITDA margin and earnings estimates.

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Source : Equity Bulls

Keywords

ICICIDirect SectorUpdate ConsumerDiscretionary