Just 1% revenue growth in Q3: Anand Rathi analysis
NEW DELHI: An Anand Rathi analysis of 11 mid-cap staples and four non-staples consumer companies suggests just 1% revenue growth in Q3 owing to de-monetisation.
Those with greater exposure to wholesale channels -- rural markets and Northern and Eastern India were the most hurt.
However, the drop in their volumes has been lower than consensus and our estimates. Volumes, the report says were a little better than expected. As anticipated, volumes of most FMCGs dropped, the drop was lower than anticipated.
This could be attributed to lengthier credit period offered, focus on smaller SKUs and modern trade and increasing retailer connect, the report said.
Rise in inputs cost and negative operating leverage due to lower volumes resulted in margin contraction for most. To counter margin headwinds, companies rationalised costs and reduced ad-spends.
While a few talked about price increases to offset the rise in input costs in FY18, peak EBITDA margins, keen competition and input cost pressure could keep margins in check, the report says.
Those with greater exposure to wholesale channels -- rural markets and Northern and Eastern India were the most hurt.
However, the drop in their volumes has been lower than consensus and our estimates. Volumes, the report says were a little better than expected. As anticipated, volumes of most FMCGs dropped, the drop was lower than anticipated.
This could be attributed to lengthier credit period offered, focus on smaller SKUs and modern trade and increasing retailer connect, the report said.
Rise in inputs cost and negative operating leverage due to lower volumes resulted in margin contraction for most. To counter margin headwinds, companies rationalised costs and reduced ad-spends.
While a few talked about price increases to offset the rise in input costs in FY18, peak EBITDA margins, keen competition and input cost pressure could keep margins in check, the report says.
