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

[email protected]

+91-22-6171-7334

Naveen Trivedi

[email protected]

+91-22-6171-7324

Aditya Sane

[email protected]

+91-22-6171-7336

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 | 2

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


HSIE Consumer Index Category Performance- five-year CAGR (%)



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

Y19

4QF

Y19

1QF

Y20

2QF

Y20

3QF

Y20

4QF

Y20

1QF

Y21

YoY Gr. (%) 3 Year Qtr YoY CAGR (%)

16%

17% 18%18%

15%

12%

9%

7%

7%

9%

8%

0%

5%

10%

15%

20%

25%

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

YoY Gr. (%) 3 Year CAGR (%)

17

16

16 18

20

14

11

10

5 6 10

13

3 5 9

13

12 15

13

14

1

0

10

6 5

(8)

(19) (20)

(10)

-

10

20

FY

08 F

Y09

FY

10 F

Y11

FY

12 F

Y13

FY

14 F

Y15

FY

16 F

Y17

FY

18 F

Y19

FY

20 1

QF

Y18

2Q

FY

18 3

QF

Y18

4Q

FY

18 1

QF

Y19

2Q

FY

19 3

QF

Y19

4Q

FY

19 1

QF

Y20

2Q

FY

20 3

QF

Y20

4Q

FY

20 1

QF

Y21

Avg. 12%Avg. 12%Avg. 12%Avg. 12%Avg. 12%

5 5 5 5 6 6

8

7

8

10

12 13

0.0

4.0

8.0

12.0

16.0

OT

C F

MC

G

Cig

aret

te

Ora

l C

are

Liq

uo

r

Per

son

al c

are

Hai

r C

are

Ho

me

Car

e

F&

B

Fo

otw

ear

Pai

nts

Dai

ry

QS

R

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


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


Personal Care Home Care



F&B OTC FMCG



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



Paints QSR



Dairy Liquor



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



-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)


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


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


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


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


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


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


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


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


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


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


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

Institutional Equities

Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,

Senapati Bapat Marg, Lower Parel, Mumbai - 400 013

Board: +91-22-6171-7330 www.hdfcsec.com

Disclosure:

We, Varun Lohchab, PGDM, Naveen Trivedi, MBA, & Aditya Sane, CA, authors and the names subscribed to this report, hereby certify that all of the views

expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the

date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific

recommendation(s) or view(s) in this report.

Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative

or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding

the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material

conflict of interest.

Any holding in stock –NO

HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475.

Disclaimer:

This report has been prepared by HDFC Securities Ltd and is solely for information of the recipient only. The report must not be used as a singular basis of any

investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor;

readers are requested to take professional advice before investing. Nothing in this document should be construed as investment advice. Each recipient of this

document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in securities of the companies

referred to in this document (including merits and risks) and should consult their own advisors to determine merits and risks of such investment. The

information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be

reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy,

completeness or correctness. All such information and opinions are subject to change without notice. Descriptions of any company or companies or their

securities mentioned herein are not intended to be complete. HSL is not obliged to update this report for such changes. HSL has the right to make changes and

modifications at any time.

This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen

or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be

contrary to law or regulation or what would subject HSL or its affiliates to any registration or licensing requirement within such jurisdiction.

If this report is inadvertently sent or has reached any person in such country, especially, United States of America, the same should be ignored and brought to

the attention of the sender. This document may not be reproduced, distributed or published in whole or in part, directly or indirectly, for any purposes or in

any manner.

Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or

price, or the income derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively

assume currency risk. It should not be considered to be taken as an offer to sell or a solicitation to buy any security.

This document is not, and should not, be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report

should not be construed as an invitation or solicitation to do business with HSL. HSL may from time to time solicit from, or perform broking, or other services

for, any company mentioned in this mail and/or its attachments.

HSL and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of

the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a

market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any

other potential conflict of interests with respect to any recommendation and other related information and opinions.

HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments

made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates,

diminution in the NAVs, reduction in the dividend or income, etc.

HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt

in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations

described in this report.

HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject

company for any other assignment in the past twelve months.

HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the

date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage

services or other advisory service in a merger or specific transaction in the normal course of business.

HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with

preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material conflict of interest at the time of publication of this

report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may

have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of

the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report.

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg

(East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022)

3045 3600 HDFC Securities Limited, SEBI Reg. No.: NSE, BSE, MSEI, MCX: INZ000186937; AMFI Reg. No. ARN: 13549; PFRDA Reg. No. POP: 11092018;

IRDA Corporate Agent License No.: CA0062; SEBI Research Analyst Reg. No.: INH000002475; SEBI Investment Adviser Reg. No.: INA000011538; CIN -

U67120MH2000PLC152193

mailto:[email protected]

Documents

FMCG - HDFC securities