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MOSL: CONSUMER 2QFY19 PREVIEW-Another quarter of double-digit growth on all fronts

Consumer 2QFY19 PREVIEW: Another quarter of double-digit growth on all fronts; Rural sales likely to outpace urban sales for fifth consecutive quarter

 

Strong performance likely from HUVR, ITC, BRIT, PAG and NEST

For our Consumer universe, we expect aggregate revenue to grow 12.1% YoY and aggregate PAT to increase 14.6% YoY in 2QFY19. Aggregate EBITDA growth is also likely to come in healthy at 14.7% YoY. While overall sectoral sales and earnings growth appears to be on a recovery path, we note that the 2QFY19 performance will be particularly driven by strong numbers from the two sectoral behemoths HUVR and ITC, which account for over 40% of sales and over 50% of EBITDA/PAT of our coverage universe. While HUVR is likely to sustain its multi-quarter strong performance, ITC’s profitability will benefit from a favorable base. Results of other companies are expected to be a mixed bag.

For ITC, we expect sales to grow by 8% YoY (with mid-single-digit increase in cigarette volumes on a base of a 6% decline in 2QFY18), EBITDA by 15.4% YoY and PAT by 13.3% YoY. HUVR is likely to continue its strong momentum in 2QFY19 (sales expected to increase by 15%, volumes by 10%, EBITDA by 23.5% YoY and PAT by 22.4% YoY), outperforming many other smaller players in the sector. BRIT, PAG, NEST and UNSP (led by a decline in interest costs and decent operating performance), too, are expected to exhibit a strong performance on the PAT front.  HMN and MRCO are likely to show a subdued performance, while APNT and PIDI should post moderate profit growth owing to higher crude-related material costs.