【出版时间及名称】：2010年2月印度消费行业研究报告
        【作者】：汇丰银行
        【文件格式】：pdf
        【页数】：46
        【目录或简介】：
Bullish on the sector: Robust demand;
cost inflation under control
􀀗 Near term, stocks may pause on
valuation and a lack of catalysts
􀀗 OW on ITC, HUL, Nestlé, Dabur, and
Asian Paints
Demand outlook robust. Demand remains robust, with
y-o-y 3Q sales growth actually 190bp higher than y-o-y sales
growth for the first three quarters. However, some companies
saw weakness due to (1) slower growth in average selling
price due to tougher comparables; (2) the effects of drought
and high food inflation reducing purchasing power. Given
these two factors, which we believe will reverse after the
winter crop harvest in two to three months, the demand
environment is strong. We expect it to remain so (16% sales
growth in FY11e vs 15% in FY10e) on the back of improved
farmer incomes over the last three years, government
spending on the social sector and high GDP growth.
Cost inflation not a concern. Although we expect gross
margins in the March quarter to remain flat y-o-y (vs up
250bp y-t-d) as a result of tougher comparables, which we
believe are priced in, the pace of inflation has actually slowed
sequentially over the year. Gross margins are likely to
remain flattish in FY11 and, if cost pressures are greater than
anticipated, the impact could be offset by cutting advertising
spending, which is at record highs.
Bullish, but no obvious near-term triggers. Our mid- to
long-term view is bullish because of the favourable demand
environment, companies’ ability to pass on cost increases in
most cases, and robust yet stable EPS growth (we estimate
17% over two years). Our coverage universe is trading at a
PE of 23x (or a five-year average of 21.3x), and we expect
current sector multiples to be maintained (although some
stocks have run ahead on valuation).
Stock calls. We are Overweight on ITC (strong demand in
cigarettes, turnaround of other businesses), HUL (return of
volume growth, valuations), Nestlé (strong position in underpenetrated
categories), Dabur (ability to identify and grow
niches) and Asian Paints (strong demand and improved
product mix).