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MOSL: CONSUMER-Consumption demand set to pick up in FY19; HUVR, TTAN, BRIT, PAG remain our top picks

CONSUMER: Consumption demand set to pick up in FY19; HUVR, TTAN, BRIT, PAG remain our top picks

 

Sales largely in line for our coverage universe

• Fourth quarter revenue growth of 7.5% YoY for our consumer coverage universe was largely in line with our estimate of 8.3% YoY growth, mainly driven by an uptick in volumes. Around 75% of our consumer universe reported EBITDA that was either in line or above our estimates. Aggregate EBITDA margin for our coverage companies expanded 160bp YoY (our estimate: +60bp YoY). It was a decent overall performance by our coverage universe - some companies impressed with stellar results and some delivered in-line performance. A few names did disappoint, but there were no big misses.

Our coverage companies that delivered standout results for 4QFY18

• Hindustan Unilever (HUVR; with 7% EBITDA beat), Page Industries (PAG; 17.5% EBITDA beat), Titan (TTAN; 19.9% EBITDA beat) and United Breweries (UBBL; 15.9% EBITDA beat) delivered the best performance within our consumer coverage universe in 4QFY17. These four companies exceeded our expectations on all fronts, i.e. sales, EBITDA and PAT.
• Even on a full-year basis, these companies delivered impressive results. The outlook for FY19, too, appears extremely upbeat. We have a Buy rating on all the four stocks, given their (i) sustained strong performance in a period when have peers struggled, (ii) higher visibility on medium-term growth and (iii) structurally strong longer-term growth stories.