FMCG - HDFC securities
Transcript of FMCG - HDFC securities
08 September 2020 Sector Update
FMCG
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
Growth divergence remains high
The HSIE Consumer-Index sales declined by 19% YoY in 1QFY21 (+10% in
1QFY20 and -8% in 4QFY20) as lockdown and weak sentiments continued to
weigh heavily on several categories. The three-year CAGR (which normalises all
base adjustments over the past three years) in 1QFY21 was +2% YoY, supported by
the healthy growth in the past two years. Categories which outperformed our
index in 1QFY21 are F&B, OTC FMCG, Home Care, and Oral Care, clocking
38/33/2/-5% YoY growth. The divergence between the underperforming and
outperforming categories was much sharper as consumer purchasing was largely
necessity driven. Footwear, Liquor QSR and Paints categories were impacted the
most, contracting by 68/58/58/46% YoY.
In the FMCG universe, Britannia, GCPL, Nestle, and HUL (including GSK)
outperformed, clocking revenue growth of 27/5/3/4% YoY respectively. Packaged
Food and Hygiene products continued to witness higher demand as the rapid
increase in the number of coronavirus cases kept consumers cautious. However,
we expect the benefit of pantry loading to reduce and growth to normalise for
Packaged Food while expecting Hygiene to continue to post strong growth. Most
companies have resumed normal operations from June and witnessed the benefit
of pent-up demand. Rural growth has been ahead of urban, and this trend will
sustain in FY21. However, we remain cautious and selective within the sector due
to the unfavourable medium-term risk-reward, given modest absolute growth
relative to expectations and valuations. Despite defensive characteristics, we are
underweight on the sector in our model portfolio. We recommend BUY on ITC
and ADD on UNSP, Colgate and Radico.
Washout for discretionary and OOH: Lockdown was in effect across the
country for most of the quarter, and consumers shied away from discretionary
expenditure and focused on necessities. Closure of restaurants and bars heavily
impacted the liquor and QSR sectors, while lesser instances of going out led to a
dip in non-essential personal care. However, several companies have witnessed
strong pent-up demand in discretionary categories since states have begun
lifting restrictions, thereby leading to a robust recovery in July and August.
Pantry loading and spillover of 4Q boost essentials: Essentials such as
packaged foods and hygiene products benefited from a high level of pantry
loading by consumers in April. Several companies have entered the hygiene
category with multiple new launches and witnessed encouraging response.
Consumers also continued to focus heavily on health and cleanliness, and
healthcare products in the OTC FMCG category were in high demand. Several
companies faced logistical constraints in March, leading to low channel
inventory. The benefit of spillover of lost sales in 4QFY20 was visible in 1QFY21.
E-commerce leading the way: Social distancing norms led to a rapid
acceleration in the adoption of e-commerce by consumers. For companies like
Dabur, e-comm salience more than tripled from the pre-COVID level. Kirana
stores also gained salience as consumers remained wary about large modern
trade shops. Multiple companies tied up with delivery aggregators and are now
investing in growing their presence in the e-comm channel with innovative
products and modern distribution network. As e-comm gains share, stronger
players like HUL, Dabur and Nestle would continue to gain market share and
drive premiumisation.
Near-term outlook: Consumer offtake is expected to remain muted. We expect
the growth rate in packaged foods to normalise, although hygiene & healthy
products will continue to gain traction. Recovery in QSR, liquor and
discretionary personal care is healthy, but return to normalcy may be slower
than other categories.
Company CMP (Rs) Reco.
HUL 2,131 REDUCE
ITC 187 BUY
Nestle 16,240 REDUCE
Britannia 3,715 REDUCE
Dabur 485 REDUCE
GCPL 658 REDUCE
Marico 373 REDUCE
UNSP 569 ADD
Colgate 1,365 ADD
Jubilant 2,242 REDUCE
Emami 373 REDUCE
Radico Khaitan 409 ADD
Note: CMP is of Friday, 04 Sept’20
FMCG Universe: Earnings vs. Valuation
(Ex-ITC)
HSIE Consumer Index- Quarterly YoY
Growth
Varun Lohchab
+91-22-6171-7334
Naveen Trivedi
+91-22-6171-7324
Aditya Sane
+91-22-6171-7336
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FMCG: Sector Update
1QFY21 ConCall Key Takeaways Company Industry/Co Strategy Revenue Margins
HUL - 80% of the company’s business saw
market share gain.
- Health, Hygiene and Nutrition (80% of
the business) saw 6% YoY growth.
- Co was operational at 70% in April.
Recovery was strong, and the company
recorded mid-single-digit growth in June.
- Co saw an impact of 6% in 4QFY20 on
account of supply chain interruption and
destocking in the channel. The benefit of
the lower inventory was visible in 1QFY21.
Secondary growth lagged primary.
- Co does not expect the impact on the
premium portfolio to remain severe.
- HUL saw strong performance in Household care and Fabric wash.
- Fabric wash saw a steady performance in mass as well as premium
portfolio.
- Sanitiser sales were 100x YoY while Handwash sales were 5x YoY.
- Closeup strengthened market share.
- Co has witnessed green shoots in some parts of skincare portfolio.
- Nutrition business saw 5% YoY growth with strong market share
gains.
- Co launched pouch packs in Horlicks and Boost.
- Foods saw broad-based double-digit growth. Growth in tea and
coffee was also strong in double digits.
- Growth in Jams and Ketchup has been robust.
- Co faced commodity headwinds in
vegetable oils, due to deflation in
FY20, and tea, due to scarcity.
- Crude prices are lower on a YoY
basis, and co will pass on some
benefits to consumers in the laundry
portfolio.
- The base business faced an
EBITDAM impact of 180bps YoY. Co
saw the benefit of 70bps from
Nutrition business, taking overall
impact on EBITDAM dip to 110bps
YoY.
- Co has been focused on turning a
fixed cost into variable to optimise
margins.
Dabur - Secondary sales declined for the quarter
was 5% YoY while June saw 7% YoY
growth. The trend in secondary sales in
July is similar to June (5-6%).
- E-comm revenue mix increased from 1.5%
pre-COVID to 5.6%.
- Co has reduced pipeline inventory to 16
days from 22-23 days pre-COVID.
- It launched apple cider vinegar which was
exclusive to Amazon. Co also plans to
launch a baby range which will be
exclusive to e-commerce platforms.
- Investment in digital media has gone up
from 4% to 20% of A&P now.
- Co is servicing e-commerce platform
directly now instead of through a stockist,
resulting in a benefit of 5%. It also launched
its own online portal for ordering products.
- The rural business grew by 1% YoY
while urban business declined by 13%
YoY due to reverse migration of labour.
- GT declined by 13% YoY but saw a
recovery in July. MT declined by 28% and it
continues to remain weak. CSD declined by
~50% and is yet to recover. However,
recovery is expected in the near term.
- Digestives declined due to limited outdoor activity and lower
outside food consumption.
- Demand for Chyawanprash saw a massive surge and growth in
honey was 69% YoY.
- Market share in honey grew from 30% pre-COVID to 50%.
- Toothpaste market share improved by 60bps YoY.
- Market share in coconut oil rose by 20bps and by 40bps in
perfumed oils.
- Market share in shampoos increased by 120bps despite sharp
category decline.
- The Home Care and Skincare categories were muted due to lower
discretionary expense.
- Sanitisers formed most of the sales in personal care.
- Consumers stayed away from cold beverages and category saw a
decline. However, Dabur gained 260bps market share.
- Co launched real mango drink in PET format and real apple mini in
Rs 10 pack
- MENA and Nepal were impacted adversely due to lockdowns.
Expats leaving the country also affected the business.
- Hobby, US and Bangladesh business was strong.
- Gross margin was supported by
lower consumer offers and
promotions in the domestic market.
- 1.5% price increase carried over
from FY20 also aided GM.
- However, co saw 3% inflation in
RM basket, which limited margin
expansion.
- Within international, co had to
increase consumer offers affecting
margins negatively. Additionally, the
impact of MENA business also
dragged gross margins as it is a high
margin market.
- Price increases in the health
portfolio will keep margins strong.
Co is the price setter in the category
due to lack of any significant
competition.
- Co has started the project
‘Samriddhi’ to rationalise costs. It
will be an ongoing activity even after
the situation around COVID
normalises.
Britannia - Volume growth in 1QFY20 was 20% YoY.
- Co is back to 21.5k direct reach, and 22k
rural reach after a dip witnessed in March.
- Distributor inventory stands at 50% of
normal inventory levels.
- Co intends to improve bakery production
capacity in 5 facilities in addition to
improving dairy production capacity. Total
additional Capex for bakery products over
the next 2 years will be Rs 700 cr, apart
from Capex for Dairy.
- Growth in traditional trade was higher
than company level growth by 30%.
- Ecomm accounts for 1% of revenue.
- UP has grown to be the second-largest
market for the co.
- Co remained focused on premium variants and prioritised
production of those variants.
- There has been no significant deceleration in growth in July.
- Category growth is expected to be in double digits in 1QFY21 and it
is expected to remain at this level over the next 1-2 quarters.
- Britannia growth is ahead of the market in most categories. Part of
the market share gain will be maintained even after the situation
eases as distributor loyalty will improve.
- Production of products in high margin categories was prioritised.
- Growth in Cheese was very strong. However, the Winkin’ Cow
portfolio took a hit due to the reduction in impulse purchases.
- Co launched Winkin’ Cow Lassi and Rs 5 Layer Cake.
- Weakness among local players drove growth in bread and rusk.
- Co plans to continue investing behind wafers and salty snacks
going forward.
- A lag in dairy prices for Britannia vs for Amul led to an increase in
the price premium in Britannia products over Amul. However, the
premium has now normalised.
- Commodity inflation was
favourable with milk witnessing
deflation. Inflation is expected to
remain benign over the next few
quarters.
- Lower inflation and improved mix
helped boost gross margin.
- Co focused on avoiding
discretionary spend and renegotiated
contracts where possible.
Page | 3
FMCG: Sector Update
Company Industry/Co Strategy Revenue Margins
GCPL - Operations are now at 90% of capacity.
- Co opened up new channels like e-
commerce and Direct to Customer.
- Rural is expected to continue to be a
growth factor-driven by low penetration
and wide range of products.
- Co does not expect any significant Capex
in India or Indonesia in the near future.
- Secondary sales growth in India was
similar to primary sales growth.
- Co reduced inventory levels from pre-
COVID levels and it intends to maintain the
same for the rest of FY21.
- Illegal incense sticks were impacted adversely due to supply
chain disruptions. Duty on raw bamboo sticks imported from
China/Vietnam was increased from 10% to 25%, which also drove up
costs for incense sticks. Incense sticks are a small part of GCPL’s
business. Hence, the impact will be lower on the company.
- Indian bamboo sticks are of lower quality which makes using them
a challenge and can drive costs higher.
- Burning format and electric saw very strong growth. Roaches part
of aerosol struggled. However, it has shown recovery.
- Professional business of Hair Colours has been impacted sharply.
However, co saw gradual sequential improvement since May.
- Indonesia grew by 5% YoY, and it is stronger than India currently.
- Co continues to scale up the hair care portfolio in Indonesia.
- Co witnessed sequential improvement since May in Africa. July was
strong, and a turnaround is expected in the near term.
- GM was impacted by an adverse
category mix as well as RM
inflation (palm oil).
- Adverse mix within HI also
impacted margin. However, co
expects the mix to improve 2QFY20
onwards.
- Co expects GM to improve in
2QFY21 as the gap between RM costs
and consumer costs will be bridged.
UNSP - 80-85% of outlets opened within a month
of states allowing the sale of liquor. On-
premise outlets continue to remain closed.
- All plants became fully functional towards
the end of June. However, localised
lockdowns caused some closures in July.
- Demand continued to improve
sequentially since May.
- Co believes home delivery will sustain as
states will see improved volumes and
revenues.
- Collections improved significantly in
1QFY21, leading to reduced overdue and
working capital vs March.
- The supply chain is not disrupted in any
way for UNSP.
- Bengal and Orissa have performed better than Western states due to
aggregators like Swiggy, Zomato receiving permission to deliver
liquor.
- Co increased prices in 7-8 states.
- Co continued to roll out renovated bundles of McDowell’s No. 1
Whisky and Royal Challenge Whisky and saw an encouraging
response.
- Co launched tetra packs of smaller SKUs (90ml) in certain states,
and it has generated good traction.
- Co has not observed any significant downtrading.
- Franchise income in normal course is Rs 1.6-2bn per year. Co
expects it to be ~40% lower going forward.
- Franchise income was down by Rs
400mn impacting GM by 160bps.
- Inventory led provision also
impacted margins. Co took a hit of
Rs 210mn impacting GM by 150bps.
- ENA is likely to remain stable and
support margins going forward.
- The glass industry was impacted by
lockdown, and hence, it will witness
some inflation in FY21. However,
inflation won’t be as severe as FY20.
- Co made ageing provision of Rs
440mn which impacted margins by
150bps. However, part of these
provisions is expected to reverse
over the year.
Marico - India business was at 104% of the average
monthly run rate of FY20 in 1QFY21. The
decline in revenues YoY was due to the
high revenue skew in 1QFY20.
- Overall growth in May-June was 3%
YoY. Co has continued to witness growth
in July as well.
- Marico saw market share gains in 90% of
its portfolio.
- Co continued to operate at lower
distributor inventory levels.
- Dip in CSD business saw a strong impact
on domestic business.
- Rural revenue was at 120% of the average
monthly run rate of FY20 while urban was
on par.
- Co is now able to service 75% of the total
outlets. Number of SKUs being serviced by
the co fell to 40% after the lockdown.
However, now the co is able to supply 60%
of pre-COVID SKUs.
- Co aims to achieve flat revenues in FY21.
- PCNO revenue was at 111% of the average monthly run rate of
FY20, while VAHO stood at 94%.
- PCNO saw healthy traction in May and June and accelerated
upgradations from loose coconut oil.
- VAHO was driven primarily by the bottom of the pyramid
segment.
- Consumer offtake in June has returned to pre-COVID levels, and
some parts of the portfolio have also witnessed growth.
- Saffola continued its growth trajectory. However, the expected
growth of 20% YoY was stunted due to CSD and MT.
- Improved penetration for Saffola will provide growth of ~10%
after the situation normalises.
- Co saw encouraging response to new products like Sanitisers and
Veggie Clean.
- It expanded the range of hygiene products with House Protect &
Travel Protect.
- Co also launched an e-comm only range of hygiene products under
KeepSafe.
- Co expects foods business to grow to Rs 3-3.5bn in FY21 and Rs 5bn
in FY22.
- Vietnam least affected, and business is returning to normal.
- However, MENA and South Africa were adversely impacted.
- Co rationalised A&P spends
aggressively to support margins and
spends stood at 7.1% of sales.
- Co expects operating margins to be
20% for the rest of the year.
- Management is focused on
rationalising discretionary costs.
Page | 4
FMCG: Sector Update
Company Industry/Co Strategy Revenue Margins
Jubilant
FoodWorks
- Consumer confidence has continued to
improve each week, along with operating
hours.
- Demand is expected to reach near-
normalcy by the end of FY21.
- The shift towards digital ordering is
expected to accelerate as consumers will
prefer ordering in to dine in.
- App downloads saw a sharp increase;
reaching 37.5mn (4.4mn downloads in
1QFY21).
- The company has decided to shut down 105 unprofitable stores,
mostly located in malls and corporate parks with a dine-in focus.
- However, the company also intends to open 100 new stores in FY21
and will maintain its store count.
- Introduction of delivery charges has not hampered the rate of
recovery for the company.
- Sri Lanka became profitable in 1QFY21 and Bangladesh also saw
strong demand. The company opened 1 new store in Bangladesh in
1QFY21. Jubilant intends to open 5 new stores in each market in
FY21.
- Entry into FMCG with Chef Boss will help boost revenue. Co
expects growth in the home cooking market to be strong.
- Gross margin expansion was
driven by low discount and lower
supply of RM to stores. The
company expects it to partially
rationalise going forward. However,
delivery charges will boost GM.
- The company optimised operating
costs and renegotiated terms with
suppliers.
- It also reached out to landlord
partners to reduce rent burden,
resulting in Rs 294mn rent reduction
in 1QFY21. Negotiations for resetting
rent permanently are ongoing.
- All full-time employees in stores
were shifted to flexi timers to
optimise employee costs.
- Delivery charges were started at Rs
20 and then moved to Rs 30. The
introduction of delivery charges did
not impact the rate of recovery in
demand.
Emami - E-commerce revenue mix doubled YoY in
1QFY21.
- The decline in secondary sales (15% YoY)
was much lower than primary sales.
- Co will launch a new brand in home
hygiene in the near term.
- Co expects the growth momentum to
continue and to register growth in FY21.
- Co has brought down distributor
inventory levels to 18-19 days (earlier 29-30
days in March, 26 days in June).
- Promoter pledge has been reduced to 55%.
It will be further reduced to 50% in the next
few weeks.
- Co registered 6% YoY consolidated growth in June (+8% YoY in
domestic) and double-digit growth in July. Growth was led by
double-digit rural growth.
- Revenue contribution of new launches in 1QFY21 was 5%.
- The volume decline was 28% YoY.
- Co launched a hygiene range under Boroplus.
- Zandu range was also expanded with ayurvedic sanitiser and other
healthcare products.
- Higher stress and consumers avoiding painkillers led to growth in
pain management portfolio.
- Chyawanprash revenue grew 7x YoY in the quarter.
- Zandu and pain management have led growth in July.
International
- Co introduced a hygiene range in its international business which
was well received.
- Benign RM helped improved GM.
- Ad spends in FY21 will be
maintained at 17-18% of sales.
- ETR for FY21 will be 19-20%.
Radico
Khaitan
- Rampur and Aurangabad plants are now
operating at 100% capacity, and all bottling
plants are also fully operational.
- 85-88% of shops are now operational
across the country.
- Radico saw strong traction in exports in
1QFY21.
- Co received a price increase of 10% in
Telangana.
- IMFL sales declined by 40% YoY while
non-IMFL sales declined by 12% YoY.
- Co has witnessed continued improvement
in demand in July.
- Co expects revenue to return to pre-
COVID levels in 2QFY21.
- Operations are expected to normalise in
2HFY21.
- Trends in CSD are similar to the
domestic industry. Co is the largest player
in CSD with 30% market share.
- Premiumisation trend continues to remain healthy. MM Verve,
8PM Premium Black, Rampur and Morpheus saw strong demand.
- MM commands 60% market share in Vodka while Morpheus
commands 68% in premium Brandy.
- 8PM Premium Black saw expansion into 14 states, and sales crossed
100,000 cases in the last month. Co expects 8PM Premium Black to
cross a million cases in FY21.
- Response to 1965 black rum has been strong. The brand has
achieved 10% market share in the CSD channel.
- Exports accounted for 7% of revenues in 1QFY21 (volume- 5%). This
revenue mix is expected to remain between 5-7% in FY21.
- Co intends to launch 2 premium brands in FY21. Both brands will
be in the brown drinks segment.
- Overall RM prices remained stable
in 1QFY21. ENA price corrected
3.8% QoQ. Sugar production has
been strong and hence, ENA prices
are expected to remain stable.
- State and product mix improved,
leading to GM expansion.
- Gross margin was 50-52% on a
normalised basis (ex-price increase).
- ASP expense as a percentage of
IMFL sales was 6.6% in 1QFY21 vs
7.1% in FY20. Going forward, ASP
will be maintained at 7-8% of IMFL
sales.
- Radico expects to expand its
EBITDA margin by 100-200bps each
year over the next 2-3 years. Co
expects EBITDAM to cross 19% in
FY23.
Page | 5
FMCG: Sector Update
HSIE Consumer Index
HSIE Consumer Index comprises various consumption categories (Oral Care,
Hair Care, Personal Care, Home Care, F&B, OTC FMCG, Cigarette, Footwear,
Paints, QSR, Dairy, and Liquor) and understands the underlying health of
consumption. The index is based on weighted average YoY growth.
HSIE Consumer Index- Quarterly Growth HSIE Consumer Index- Annual Growth
Source: Company, HSIE Research
Source: Company, HSIE Research
HSIE Consumer Index Category Performance- five-year CAGR (%)
Source: Company, HSIE Research
Source: Company, HSIE Research
HSIE Consumer Index - Category-wise Aggregate Performance
YoY Gr. (%) 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4
Qtr FY16 FY17 FY18 FY19 FY20
5 Yr
Avg
Personal Care 14% 10% 10% 7% 4% 5% -4% -17% -11% -7% 7% 3% 11% 10% -3% 9%
Hair Care 22% 16% 17% 6% 9% -2% -4% -18% -22% -12% 7% 0% 10% 15% -4% 11%
Oral Care 10% 7% 9% 5% 8% 5% 6% -7% -5% -1% 5% 3% 9% 8% 1% 7%
F&B 14% 14% 11% 10% 8% 8% 7% -6% 38% 12% 0% 10% 10% 11% 6% 8%
Home Care 20% 10% 12% 10% 8% 9% 8% -7% 2% 3% 3% 7% 12% 13% 4% 9%
OTC FMCG 20% 12% 10% 9% 9% 7% 6% -1% 33% 12% 2% -2% 8% 12% 5% 6%
Cigarette 9% 11% 10% 11% 11% 6% 6% -5% -31% -6% 2% 5% 5% 10% 5% 6%
Liquor 17% 22% 15% 7% 12% 4% 5% -8% -58% -14% 1% 4% 9% 14% -2% 6%
QSR 26% 24% 19% 11% 10% 12% 14% 2% -58% -7% 14% 6% 17% 20% 10% 15%
Dairy 12% 9% 12% 17% 14% 8% 11% -1% -12% 1% 18% 11% 10% 14% 8% 12%
Paints 16% 11% 22% 10% 16% 7% 2% -8% -46% -11% 9% 9% 12% 14% 4% 10%
Footwear 10% 19% 16% 13% 14% 7% 11% -8% -68% -14% 9% 3% 10% 15% 5% 8%
Note: Category growth is weighted average growth (YoY) based on revenue size of each player
-20%
-10%
0%
10%
20%
4QF
Y16
1QF
Y17
2QF
Y17
3QF
Y17
4QF
Y17
1QF
Y18
2QF
Y18
3QF
Y18
4QF
Y18
1QF
Y19
2QF
Y19
3QF
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Y20
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Y20
4QF
Y20
1QF
Y21
YoY Gr. (%) 3 Year Qtr YoY CAGR (%)
16%
17% 18%18%
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12%
9%
7%
7%
9%
8%
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15%
20%
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3 5 9
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12 15
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6 5
(8)
(19) (20)
(10)
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FY
08 F
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FY
10 F
Y11
FY
12 F
Y13
FY
14 F
Y15
FY
16 F
Y17
FY
18 F
Y19
FY
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2Q
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QF
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FY
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2Q
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FY
20 1
QF
Y21
Avg. 12%Avg. 12%Avg. 12%Avg. 12%Avg. 12%
5 5 5 5 6 6
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Page | 6
FMCG: Sector Update
HSIE Consumer Index - Category-wise Revenue Performance (GREEN/RED is outperformer/ underperformer in the category)
Oral Care 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
Colgate 8 6 6 4 5 4 (7) (4) (1) 5 3 5 7 1 4
Dabur 4 10 8 11 4 9 (16) 1 (0) 16 7 17 10 2 10
Gillette 14 36 (14) 42 5 12 13 (36) (1) (12) (3) 26 17 (2) 5
Weighted Avg Gr. (%) 7 9 5 8 5 6 (7) (5) (1) 5 3 9 8 1 5
Hair Care 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
Marico –PCNO 32 19 4 8 (4) (5) (12) (12) (8) 5 (9) 22 23 (2) 8
Marico – VAHO 12 19 7 11 (6) (17) (18) (32) (18) 16 4 4 12 (6) 6
Dabur 11 24 3 12 3 1 (20) (23) (10) 7 (7) 4 14 (1) 3
Bajaj Corp 1 12 11 8 3 (7) (29) (18) (13) 7 (1) 12 10 (7) 4
Emami – Navratna 3 10 1 4 (3) 11 (12) (41) (11) 6 3 8 8 (2) 5
GCPL – Hair Colors 21 - 7 - 2 (4) (23) (18) (11) 9 4 11 10 (6) 6
Emami – Kesh King 2 26 15 30 (11) 18 (26) (33) (13) (23) 48 (14) 13 1 5
Weighted Avg Gr. (%) 16 17 6 9 (2) (4) (18) (22) (12) 7 0 10 15 (4) 6
Personal Care 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
HUL 10 11 7 4 5 (3) (13) (12) (6) 7 4 10 11 (2) 6
GCPL – Soaps 11 2 (1) 3 (4) (4) (23) (2) (8) 3 (2) 19 6 (7) 4
Gillette 11 12 8 7 (0) (8) (18) (21) (12) 10 2 7 10 (12) 3
Emami -Boroplus (7) 4 17 (7) 39 (12) (77) 28 (6) 8 15 22 2 (7) 8
Emami – F&H 12 (2) (4) (7) (32) (39) (42) (70) (46) 9 (6) 4 3 (29) (4)
Dabur – Skin 12 19 11 12 1 (0) (24) (13) (9) 4 4 11 17 (3) 7
Weighted Avg Gr. (%) 10 10 7 4 5 (4) (17) (11) (7) 7 3 11 10 (3) 6
Home Care 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
HUL – Detergent 12 15 13 10 9 10 (4) (2) 3 1 8 15 15 6 9
GCPL – HI (2) - (6) (4) 4 3 (16) 27 5 13 3 2 2 (3) 3
Dabur – HI 11 9 16 11 7 3 (18) (31) (10) 13 4 14 13 1 9
Jyothy – Fabric care 11 6 2 5 13 (11) (17) (24) (10) 7 8 4 8 (3) 5
Jyothy – Dishwash 14 9 22 1 9 0 (21) 17 1 12 9 9 17 (4) 9
Jyothy – HI (20) 12 (4) (22) (1) 2 (36) 151 29 16 (4) (0) (3) (19) (2)
Weighted Avg Gr. (%) 10 12 10 8 9 8 (7) 2 3 3 7 12 13 4 8
F&B 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
Britannia 13 11 10 6 6 5 2 27 10 10 8 9 12 5 9
Nestle 17 12 10 13 11 10 11 3 8 (18) 15 12 13 11 7
HUL - Food 15 12 12 8 10 8 (43) 111
21 12 3 11 11 4
8
HUL - Refreshment - 7 9 12 9
Marico – Saffola 9 8 15 6 5 13 25 16 15 10 8 (4) 10 12 7
Dabur – Real 2 12 (7) 2 (5) (2) (21) (34) (15) (9) 13 1 9 (6) 2
Agro Tech 7 0 (7) 0 (3) 6 2 3 2 3 4 0 1 1 2
Weighted Avg Gr. (%) 14 11 10 8 8 7 (6) 38 12 (0) 10 10 11 6 7
OTC FMCG 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
GSK - HUL 14 8 9 8 6 4 5
6 0 (4) 8 11 6 4
Dabur – Health Supp. 12 14 10 20 14 12 (10) 53 17 (4) (4) 10 15 8 5
Emami – Pain MGT (8) 6 1 (6) 4 13 (5) 15 7 12 6 6 7 3 7
Dabur – OTC 10 18 15 14 4 4 (21) 22 2 10 (8) 5 14 (0) 4
Amrutanjan – Balm 15 14 27 26 22 19 (31) 21 8 13 16 9 20 4 12
Emami – Digestive 1 18 9 (3) - 4 (9) 23 5 34 (1) (7) 12 (2) 7
Weighted Avg Gr. (%) 12 10 9 9 7 6 (1) 33 12 2 (2) 8 12 5 5
Note - GSK-HUL 4Q/FY20 is estimated
Page | 7
FMCG: Sector Update
Cigarette 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
ITC 10 10 11 6 6 5 (6) (29) (6) 4 5 5 10 3 5
Godfrey Phillips (Gross) 6 8 13 40 12 13 3 (48) (5) (8) 2 8 9 16 5
VST 32 23 (2) 25 3 17 7 (19) 2 6 4 3 16 13 8
Weighted Avg Gr. (%) 11 10 11 11 6 6 (5) (31) (6) 2 5 5 10 5 5
QSR 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
Jubilant FoodWorks 21 17 11 10 12 14 4 (48) (4) 16 6 17 18 10 13
Westlife Developers 32 21 12 12 13 17 (1) (75) (12) 12 12 22 23 10 16
Speciality Restaurants 18 24 15 10 4 8 (10) (91) (22) 7 (3) (5) 17 3 4
Weighted Avg Gr. (%) 24 19 11 10 12 14 2 (58) (7) 14 6 17 20 10 13
Liquor 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
United Spirits 14 10 4 10 3 3 (11) (54) (15) (3) 8 1 10 (1) 3
Pernod Ricard 34 14 9 13 3 7 (7) (55) (13) 2 3 11 18 (11) 5
United Breweries 20 21 11 10 3 0 (13) (75) (21) 3 (2) 19 15 0 7
Radico Khaitan 15 15 6 21 10 17 15 (34) 2 11 2 9 15 16 10
Weighted Avg Gr. (%) 22 15 7 12 4 5 (8) (58) (14) 1 4 9 14 (2) 5
Paints 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
Asian Paints 9 24 11 18 9 3 (7) (43) (9) 10 7 11 14 5 9
Berger 16 21 13 16 7 5 (8) (46) (10) 7 8 13 17 5 10
Kansai 11 18 4 6 (4) (8) (14) (59) (21) 8 18 15 13 (4) 10
Weighted Avg Gr. (%) 11 22 10 16 7 2 (8) (46) (11) 9 9 12 14 4 10
Footwear 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
Bata 15 16 7 11 7 7 (9) (85) (20) 12 2 6 11 4 7
Relaxo 19 21 16 15 14 9 (15) (47) (10) 16 2 19 18 5 12
Mirza International 23 21 27 18 3 30 (13) na na 1 1 4 18 9 7
Liberty 33 (11) 8 15 (20) 3 39 na na (14) 10 10 11 3 4
Weighted Avg Gr. (%) 19 16 13 14 7 11 (8) (68) 6 9 3 10 15 5 8
Dairy 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 Avg. 4 Qtr FY16 FY17 FY18 FY19 FY20 Avg. 5 Yr
Hatsun Agro 12 13 12 14 5 15 6 (12) 4 22 17 0 11 10 12
Heritage 0 8 14 13 11 9 3 (13) 2 14 6 27 8 8 12
Parag 14 16 30 15 12 5 (20) - 3 14 5 11 25 2 11
Weighted Avg Gr. (%) 9 12 17 14 8 11 (1) (12) 1 18 11 10 14 8 12
Source: Company, HSIE Research
Page | 8
FMCG: Sector Update
Category-wise Volume Performance
Volume Gr (%) 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 FY16 FY17 FY18 FY19 FY20
Personal Products
HUL (FMCG business) 10 10 7 5 5 5 (7) (9) 6 1 6 10 2
Colgate – Overall 7 7 5 4 4 2 (8) (7) 4 (2) 3 6 1
Dabur – Overall 8 12 4 10 5 6 (15) (10) 4 2 5 11 2
Emami - Overall (4) 4 - - 1 (2) (19) (25) 14 7 3 4 (4)
Bajaj Corp. - Nomarks na na na na na na na na 16 (12) (16) na na
Hair Care
Bajaj Corp. - ADHO (1) 9 7 5 (0) (9) (30) (23) 3 (2) 3 7 (9)
Bajaj Corp. - Brahmi Amla na na na na na na na na 16 (12) 30 na na
Marico – FMCG 6 5 8 6 1 (1) (3) (11) 7 4 2 8 1
Marico – PCNO 8 9 6 9 (1) (2) (8) (11) 7 4 2 8 -
Marico –VAHO 5 7 1 7 - (7) (11) (30) 14 4 4 7 (2)
Home Care
GCPL - Branded Biz 5 1 1 5 7 7 (15) 3 10 4 9 5 1
Jyothy Labs - Overall 4 6 5 6 8 (6) (22) (8) 9 7 2 9 (4)
F&B
Britannia Industries 12 7 7 4 3 2 - 26 11 5 8 10 2
Marico - Saffola 5 2 18 3 1 11 25 16 9 8 (1) 8 9
Nestle - Domestic 15 12 9 12 10 10 9 2 1 2 (1) (36) 25
QSR
Jubilant FoodWorks - SSG 21 15 6 4 5 6 (3) (61) 3 (2) 14 16 3
Westlife Development - SSG 26 15 6 7 7 9 (7) (55) 2 4 16 17 4
Cig
ITC-Cig 6 8 9 4 3 2 (10) (35) (9) 1 (3) 6 (0)
Godfrey Phillips 4 7 11 17 12 10 na na na na 1 9 na
Liquor
United Spirits - P&A 15 12 7 8 3 3 (20) (51) 10 8 1 12 (2)
United Spirits - Total 10 4 1 6 1 (2) (13) (49) (1) (3) (13) 4 (2)
Radico Khaitan - P&A 15 18 22 16 11 21 11 (47) 9 8 6 21 15
Radico Khaitan - Total 11 7 6 12 11 14 13 (44) (7) 0 7 11 12
Page | 9
FMCG: Sector Update
Category outperformers and under-performers (LTM basis)
F&B & OTC FMCG outperformed in LTM: F&B, Home Care and OTC FMCG
categories outperformed in the past four quarters, aided by the heightened
demand in the last few months. HUL (including GSK), Marico (Saffola) and
Britannia clocked the highest growth in F&B while Dabur (Health Supplements)
and Emami (Balm) led the growth in OTC FMCG.
Footwear and Liquor underperformed in LTM: Footwear and Liquor categories
have been the most impacted in the past four quarters due to lockdown since
March. Within Liquor, United Breweries was the worst impacted as the closure
of pubs reduced beer consumption. Radico outperformed the industry with a 2%
average growth in the last four quarters.
Categories
Category
Gr.
(1QFY21)
Category
Gr. (LTM) Out-performers
Avg.
Gr.
(LTM)
Out-
performance
(x)
Under-performers
Avg.
Gr.
(LTM)
Under-
performance
(x)
Personal Care -11% -7% Emami (Boroplus) -6% .8x Emami (F&H) -46% 6.9x
Hair Care -22% -12% Marico (PCNO) -8% .7x Marico (VAHO) -18% 1.6x
Oral Care -5% -1% Dabur 0% .6x Gillette -1% 2.4x
F&B 38% 12% HUL (F&B) 21% 1.9x Dabur (Juices) -15% -1.3x
Home Care 2% 3% Jyothy (HI) 29% 10.6x Dabur (HI) -10% -3.6x
OTC FMCG 33% 12% Dabur (Health Supplement) 17% 1.5x Dabur (OTC) 2% 0.2x
Cigarette -31% -6% VST 2% -.4x ITC -6% 1.1x
Liquor -58% -14% Radico 2% -.1x United Breweries -21% 1.5x
QSR -58% -7% Jubilant FoodWorks -4% .6x Speciality -22% 3.0x
Dairy -12% 1% Hatsun Agro 4% 2.5x Heritage 2% 1.7x
Paints -46% -11% Asian Paints -9% .8x Kansai -21% 1.9x
Footwear -68% -14% Liberty 9% -.6x Bata -20% 1.4x
Source: HSIE Research
Page | 10
FMCG: Sector Update
Oral Care Hair Care
Source: Companies, HSIE Research
Source: Companies, HSIE Research
Personal Care Home Care
Source: Companies, HSIE Research
Source: Companies, HSIE Research
F&B OTC FMCG
Source: Companies, HSIE Research
Source: Companies, HSIE Research
17
14
18
15
15 16
15
11
5
3 9 8
1 (1
)8
20
7 10
7
9
5 8
5 6
(7) (5
)
-10
-1
8
17
26
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 11%
16
17
15
14
28
18
10
24
7
0
10
15
(4)
(5)
15
21
13
22
16
17
6 9
(2)
(4)
(18)
(22)-30
-16
-2
12
26
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 13%
15
14 17
14
17
14
9 12
7
3 11
10
(3
)
3 10
1
7
11
14
10
10
7 4 5 (4
)(1
7)(1
1)
-20
-10
0
10
20
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. (11)%
16
22
3 6
22
19
10
10
3 7
12
13
4 4
11
18
16
20
10
12
10
8 9 8
(7)
2
(10)
(1)
8
17
26
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 11%
17
15
13
20
17
12
10
11
(0)
10
10
11
6
7 8
13
12 14
14
11
10
8 8 7
(6)
38
(10)
(1)
8
17
26
35
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 12%
15
25
20
17
16
14
15
11
2
(2)
8 12
5
(1)
5 18
9
20
12
10
9 9 7 6
(1)
33
-5
5
15
25
35
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21Avg. 12%
Page | 11
FMCG: Sector Update
Cigarette Footwear
Source: Companies, HSIE Research
Source: Companies, HSIE Research
Paints QSR
Source: Companies, HSIE Research
Source: Companies, HSIE Research
Dairy Liquor
Source: Companies, HSIE Research
Source: Companies, HSIE Research
13 16
20
16
15
11
12
8 2
5 5
10
5 6 4
6
5 9
11
10
11 11
6 6
(5)
(31)-34
-24
-14
-4
6
16
26
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 11% 14
16
16 19
21
17
16
15
9 3
10 15
5
11
7 14
9 10 19
16
13
14
7 11
(8
)(6
8)
(75)
(50)
(25)
-
25
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg.
14%
17
19
21
19 25
13
15
12
9
9 12
14
4 8 15
12
15 16
11
22
10 16
7 2
(8)
(46)-50
-30
-10
10
30
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 15% 55
35 42
55
30
32
18
16
14
6 17
20
10
11
9 20
28
26
24
19
11
10
12
14
2 (5
8) (60)
(40)
(20)
-
20
40
60
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 27%
44
20
13
16
26
22
1
3
21
18
11
10
14
8 16
12
1
2
3
12
9 12
17
14
8
11
(1
)(1
2)
(15)
-
15
30
45
FY
08F
Y09
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 18%
0
19
37
18
11
5 0 1
4 9 14
(2)
(3)
5 8 1
9
17 22
15
7 12
4 5
(8)
(58) (60)
(40)
(20)
-
20
40
FY
10F
Y11
FY
12F
Y13
FY
14F
Y15
FY
16F
Y17
FY
18F
Y19
FY
201Q
FY
182Q
FY
183Q
FY
184Q
FY
181Q
FY
192Q
FY
193Q
FY
194Q
FY
191Q
FY
202Q
FY
203Q
FY
204Q
FY
201Q
FY
21
Avg. 9%0
Page | 12
FMCG: Sector Update
HSIE Universe Performance
1QFY21 performance
Companies Revenue Growth (%) Domestic Volume Growth (%) Adj EBITDA Growth (%) PBT Growth (%)
1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q
HUL 7 7 3 (9) 4 5 5 5 (7) (9) 13 16 14 (16) (1) 13 8 16 (11) (1)
ITC (cig) 6 6 5 (6) (29) 4 3 2 (10) (35) 8 7 6 (12) (39) na na na na na
ITC (Total) 6 5 5 (6) (17) na na na na na 9 8 7 (9) (42) 12 10 7 (9) (35)
Nestle 13 11 10 11 3 12 10 10 9 2 6 2 13 4 7 11 4 20 (1) (1)
Britannia 6 6 5 2 27 4 3 2 - 26 1 8 11 4 82 4 9 7 2 81
Dabur 9 4 7 (12) (13) 10 5 6 (15) (10) 16 6 8 (25) (7) 15 6 9 (22) (8)
UNSP 10 3 3 (11) (54) 6 1 (2) (13) (49) 62 (8) 17 (7) (123) 91 (14) 20 (18) (160)
GCPL 1 1 1 (18) 5 5 7 7 (15) 3 2 18 2 (18) 3 (3) 23 4 (19) 5
Marico 7 (0) (2) (7) (11) 6 1 (1) (3) (11) 30 20 7 (4) 1 26 15 4 (3) 0
Jubilant 10 12 14 4 (48) 4 5 6 (3) (54) 4 10 3 (38) (53) 1 7 (6) (53) (60)
Emami 6 5 0 (17) (26) - 1 (2) (19) (25) 9 3 0 (37) (8) 55 11 1 (70) (13)
Colgate 4 5 4 (7) (4) 4 4 2 (8) (7) 6 (2) 1 (15) 3 5 (7) (5) (16) 2
Jyothy 2 9 (6) (24) 4 6 8 (6) (22) 6 12 8 (9) (51) 19 10 5 (24) (72) 28
Bajaj Corp 8 3 (7) (29) (18) 5 (0) (9) (30) (23) 2 3 (24) (70) (19) 9 (0) (21) (62) (12)
Westlife 12 13 17 (1) (75) 7 7 9 (7) (55) (8) 47 52 (35) (285) (33) 95 142 (545) (1,053)
Radico 21 10 17 15 (34) 12 11 14 13 (44) 8 (8) 5 13 (23) 15 (11) 4 11 (30)
ITC- EBIT growth; HUL- including GSK
HSIE Universe: Company Revenue Performance HSIE Universe: Company EBITDA Performance
Source: Companies, HSIE Research Source: Companies, HSIE Research
HSIE Universe: Volume Performance HSIE Universe: Company Volume Performance
Source: Companies, HSIE Research
Source: Companies, HSIE Research
-9%
-5%
0%
5%
9%
14%
18%
ITC
HU
L
Da
bu
r
Bri
tan
nia
Ma
rico
Co
lga
te
Em
am
i
Jub
. Fo
od
Nes
tle
GC
PL
Ba
jaj C
orp
Jyo
thy
UN
SP
Ra
dic
o
GS
K
Ag
gre
ga
tes
Avg (FY17-19) FY20
-6%
2%
10%
18%
26%
34%IT
C
HU
L
Da
bu
r
Bri
tan
nia
Ma
rico
Co
lga
te
Em
am
i
Jub
. Fo
od
Nes
tle
GC
PL
Ba
jaj C
orp
Jyo
thy
UN
SP
Ra
dic
o
GS
K
Ag
gre
ga
tes
Avg (FY17-19) FY20
0%
5%
9%
14%
18%
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17
FY
18
FY
19
FY
20
Domestic Volume Gr. (%) Average (%)
-4%
2%
7%
13%
18%
ITC
(C
ig)
HU
L
Co
lga
te
Ma
rico
Ba
jaj C
on
s
Bri
tan
nia
Da
bu
r
Em
am
i
Jub
ila
nt
Nes
tle
GC
PL
GC
PL
-S
oa
ps
Jyo
thy
UN
SP
Ra
dic
o
Av
era
ge
Avg (FY17-19) FY20
Page | 13
FMCG: Sector Update
Valuation trend
In the past five months, after COVID-19 steadily impacted FMCG companies, they
have seen steep volatility. In the initial period of the disease’s impact, the fall in
the stock prices was sharp for most companies but less than that in NIFTY-50.
However, in the later phase (past three months), Nifty has outperformed the
FMCG sector - it has gained by 12% while NSE FMCG is up by only 4%.
Sector P/E (12-month Rolling Forward) Sector (Ex-ITC) P/E (12-month Rolling Forward)
Source: Companies, Bloomberg, HSIE Research Source: Companies, Bloomberg, HSIE Research
FMCG Universe: Earnings vs. Valuation FMCG Universe: Earnings vs. Valuation (Ex-ITC)
Source: Companies, Bloomberg, HSIE Research Source: Companies, Bloomberg, HSIE Research
20
28
36
44
52
60
Sep-10 Sep-12 Sep-14 Sep-16 Sep-18 Sep-20
FMCG Sector P/E (x) 10 Years' Avg P/E (x)
5 Years' Avg P/E (x) 3 Years' Avg P/E (x)
CurrentP/E: 39x
20
28
36
44
52
60
Sep-10 Sep-12 Sep-14 Sep-16 Sep-18 Sep-20
FMCG Sector P/E (x) 10 Years' Avg P/E (x)
5 Years' Avg P/E (x) 3 Years' Avg P/E (x)
CurrentP/E: 55x
0x
12x
24x
36x
48x
60x
-7
0
7
14
21
28
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17
FY
18
FY
19
FY
20
FY
21
E
EPS Gr (%) P/E (x)(%)
0x
12x
24x
36x
48x
60x
0
7
14
21
28
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17
FY
18
FY
19
FY
20
FY
21
E
EPS Gr (%) P/E (x)(%)
Page | 14
FMCG: Sector Update
FMCG Universe: Profit Mix FMCG Universe: Market Cap Mix
Source: Companies, Bloomberg, HSIE Research Source: Companies, Bloomberg, HSIE Research
FMCG Universe: Valuation Trend
P/E (x) 1 Yr Fwd P/E (x) P/E Re-rating/De-rating
10 Yr 5 Yr 3 Yr Current 10 Yr 5 Yr 3 Yr
Bajaj Cons 20 23 22 11 -45% -53% -50%
Emami 34 40 37 31 -9% -24% -17%
Jyothy 35 35 31 24 -31% -31% -25%
ITC 25 25 23 15 -40% -38% -32%
UNSP 126 71 67 63 -50% -12% -6%
Radico 21 19 22 20 -1% 7% -7%
Marico 35 43 43 42 18% -3% -4%
GCPL 36 44 47 40 10% -8% -16%
Britannia 34 45 48 45 32% 0% -7%
Colgate 38 41 42 41 8% -2% -2%
Dabur 36 44 48 51 39% 16% 6%
HUL 41 50 55 57 39% 15% 3%
Nestle 50 54 57 66 34% 23% 16%
Jubilant 65 63 57 85 31% 35% 49%
FMCG 34 37 39 39 15% 4% 1%
FMCG (Ex-ITC) 41 47 51 55 36% 17% 9%
Nifty-50 19 21 22 20 10% -2% -6%
ITC, 42%
HUVR, 25%
NEST, 6%
DABUR, 5%
GCPL, 5%
BRIT, 6%
UNSP, 1%MRCO, 3%CLGT, 3%
HMN, 2%JUBI, 1%
RDCK, 1%JYL, 1% BAJAJ
CON, 1%
ITC, 18%
HUVR, 40%NEST, 13%
DABUR, 7%
GCPL, 5%
BRIT, 5%
UNSP, 3%
MRCO, 3%
CLGT, 3%
HMN, 1%
JUBI, 1%RDCK, 0%
JYL, 0% BAJAJ CON,
0%
Page | 15
FMCG: Sector Update
FMCG Universe: Stock Performance Companies 1M (%) 3M (%) 6M (%) 12M (%) 3Yr (%) 5Yr (%)
HUL (3.2) 1.8 (2.9) 16.1 76.3 156.0
ITC (3.2) (6.7) 2.7 (23.6) (34.0) (11.7)
Nestle (1.6) (5.1) (1.2) 28.7 131.0 170.7
Dabur (3.8) 4.5 (3.3) 10.2 54.2 69.0
Britannia (3.7) 6.9 20.3 38.3 74.0 148.0
GCPL (3.2) 0.9 3.1 9.8 5.8 61.1
UNSP (2.7) (3.0) (11.9) (6.3) 11.0 (10.9)
Marico 2.9 14.5 32.3 (2.9) 19.1 86.1
Colgate (5.6) 0.1 3.1 9.8 22.8 44.5
Emami 56.0 87.7 54.1 24.9 (33.2) (40.6)
Jubilant 20.7 33.3 32.8 87.0 225.8 184.2
Radico 5.8 17.6 10.6 34.8 147.6 379.4
Jyothy (0.6) 18.7 11.1 (0.4) (28.4) (12.8)
Bajaj Corp (1.7) 14.1 (4.9) (33.1) (57.4) (64.4)
NSE FMCG (0.1) 4.4 6.5 7.4 19.4 56.7
Nifty 50 2.1 11.7 3.1 4.5 13.9 48.1
Note:
Green indicates out-performance to Nifty 50 during the respective period
Red indicates under-performance to Nifty 50 during the respective period
Peer Set Comparison
Company
Mcap
(Rs
bn)
CMP
(Rs/sh) Reco TP
EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
FY21E/
CY20E
FY22E/
CY21E
FY23E/
CY22E
FY21E/
CY20E
FY22E/
CY21E
FY23E/
CY22E
FY21E/
CY20E
FY22E/
CY21E
FY23E/
CY22E
FY21E/
CY20E
FY22E/
CY21E
FY23E/
CY22E
HUL 4,613 2,131 REDUCE 2,016 35.4 39.4 43.0 60.1 54.1 49.5 41.6 37.1 31.4 43.8 26.9 61.3
ITC 2,302 187 BUY 236 11.5 13.0 13.9 16.3 14.4 13.5 10.5 9.1 8.3 40.5 44.8 46.8
Nestle 1,566 16,240 REDUCE 14,103 230.5 263.3 300.8 70.5 61.7 54.0 48.1 42.3 37.4 66.3 61.3 66.6
Britannia 893 3,715 REDUCE 3,479 79.4 84.9 93.1 46.3 43.7 39.9 33.8 31.6 28.7 55.5 53.3 55.8
Dabur 857 485 REDUCE 433 9.1 10.1 10.8 53.2 47.9 44.7 44.6 39.7 36.2 40.4 43.3 44.7
GCPL 672 658 REDUCE 628 15.6 17.4 19.6 42.1 37.8 33.5 31.7 29.1 26.5 18.7 21.0 23.6
Marico 482 373 REDUCE 351 8.4 9.8 10.8 44.6 38.5 34.6 31.0 27.8 25.0 43.9 49.3 54.5
UNSP 414 569 ADD 569 6.4 12.4 14.7 88.3 45.8 38.9 40.5 26.1 22.8 12.8 22.0 23.4
Colgate 372 1,365 ADD 1,491 31.6 36.0 39.9 43.3 37.9 34.2 28.1 24.7 22.5 65.9 79.9 91.5
Jubilant 296 2,242 REDUCE 1,758 18.9 36.3 41.8 118.8 61.8 53.6 64.4 37.2 32.3 10.8 25.4 31.7
Emami 169 373 REDUCE 232 11.6 12.7 13.5 32.2 29.4 27.6 22.8 21.0 19.5 26.2 32.1 37.1
Radico
Khaitan 54 409 ADD 426 17.7 22.7 26.4 23.1 18.0 15.5 14.3 11.7 9.9 12.8 15.2 16.4
Source: Company, HSIE Research Note: CMP is of Friday, 04 Sept’20
Page | 16
FMCG: Sector Update
FMCG Companies P/E Bands
HUL P/E Band ITC P/E Band NESTLE P/E Band
BRITANNIA P/E Band DABUR P/E Band GCPL P/E Band
MARICO P/E Band COLGATE P/E Band EMAMI P/E Band
JUBILANT P/E Band UNSP P/E Band RADICO P/E Band
Source: Bloomberg, Companies, HSIE Research
10.x
25.x
40.x
55.x
70.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
17.x
24.x
31.x
38.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
25.x
40.x
55.x
70.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
22.x
34.x
46.x
58.x
70.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
22.x
34.x
46.x
58.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
24.x
38.x
52.x
66.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
20.x
30.x
40.x
50.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
19.x
28.x
37.x
46.x
55.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
10.x
22.x
34.x
46.x
58.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
20.x
46.x
72.x
98.x
124.x
150.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
P/E 3 Yr Avg P/E5 Yr Avg P/E 10 Yr Avg P/E
0.x
150.x
300.x
450.x
600.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
10 Yr Avg P/E P/E3 Yr Avg P/E 5 Yr Avg P/E
0.x
9.x
18.x
27.x
36.x
Au
g-1
0
Au
g-1
1
Au
g-1
2
Au
g-1
3
Au
g-1
4
Au
g-1
5
Au
g-1
6
Au
g-1
7
Au
g-1
8
Au
g-1
9
Au
g-2
0
10 Yr Avg P/E P/E3 Yr Avg P/E 5 Yr Avg P/E
Page | 17
FMCG: Sector Update
HDFC securities
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