Q1FY23 Result Preview - FMCG - ICICI Direct

FMCG companies are expected to post price led revenue growth given most companies have taken 10-15% price hikes in the last one year to pass on sharp inflation in palm oil, crude derivatives and agri commodities. Volume growth is likely to remain muted in the context of lower sales in base quarter, which was impacted by second wave of pandemic. Our FMCG universe is expected to post 14.8% revenue growth driven by strong growth in ITC & HUL. We expect 4% volume growth in HUL on account of lower sales in base quarter specifically in discretionary categories like cosmetics and skin care. Moreover, strong summer demand for ice-creams after two years of disruption would have aided growth in the foods segment. Despite high base quarter sales, Dabur is expected to post strong 8% sales growth led by 4-5% volume growth in India business. Tata Consumer Products (TCPL) is likely to witness 5% volume growth in India beverage business given tea prices remained benign in the last one year. Nestlé may see price led sales growth in Q1 with Maggi noodles continuing growth momentum and growth in milk products remains a drag. With elevated edible oil prices in most part of quarter & a high base of last year, Marico is likely to witness volume de-growth in Saffola brand. Within our coverage universe, ITC is likely to post strongest revenue growth led by full recovery in cigarette volumes, robust growth in paperboard business, recovery in stationary business & price hikes taken in FMCG business to pass on RM inflation. VST Industries is also likely to witness full recovery in cigarettes volumes to pre-Covid levels. FMCG companies have slowed down new product launches in the last few quarter given pressure on gross margins leading to reduction in ad-spends.

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Source : Equity Bulls

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Q1FY23 ResultPreview FMCG ICICIDirect