【出版时间及名称】：2010年4月印度消费行业研究报告
        【作者】：摩根大通
        【文件格式】：pdf
        【页数】：45
        【目录或简介】：

Growth to moderate in FY11. We believe lower price/mix (driven by
consumer’s desire for value in an inflationary environment and heightened
competition) coupled with firming input costs and high A&P spends would
lead to slower earnings growth despite good volume momentum. We estimate
FY11E earnings growth to moderate to 15% vs 22% in FY10 for our coverage
universe. We retain our cautious stance on the sector.
• Competition and inflation to keep pricing power under check in HPC
space; Firming input costs to weigh on margin growth. Vol growth is
preferred over margins by nearly all HPC companies and they are unlikely to
raise prices in near term in light of intensifying competition and high
inflation. Bulk of growth is being driven by penetration in mass markets,
leading to keener price point competition which further puts pricing power at
risk in our view. Input cost inflation (expect gross margins to contract 30-80bp
y/y for our coverage universe ex-UNSP) coupled with elevated A&P spends
(currently at an all time high) would be additional headwinds for margins.
• Earnings revision. We raise EPS estimates for ITC by 3-4% for FY11-12E as
we build in recent 5% wtd. avg. cigarette price hike. For Nestle India, we raise
vol growth estimates for culinary and milk products leading to 1-2% increase
in EPS for CY10-11E. For Dabur we reduce EPS for FY11-12E by 3% as we
build in higher tax rates. We extend PT timeframe for ITC and Dabur to
Mar’11 and set PT of Rs278 and Rs172, respectively.
• Domestic companies eyeing overseas growth opportunities aggressively.
As it becomes incrementally more challenging to defend/penetrate new FMCG
segments in India (which face keen competition from MNCs), domestic
players like GCPL and Dabur are actively trying to expand presence in other
developing Asian and African markets to enhance their earnings growth
profile. These companies continue to explore inorganic growth opportunities
which should be an important determinant for their growth and valuation
going forward.
• Valuations leave little room for upside; Prefer ‘Sin’ stocks over HPC. The
sector trades at 23x 1-year forward P/E - a 5% premium to its 5 year average
and over 30% premium to the market. High valuation coupled with slower
estimated EPS growth (15% vs 27% for market) should lead the sector to
underperform. In this backdrop, we prefer companies with dominant market
share, pricing power/entry barriers, and limited competitive risks – ITC and
United Spirits under our coverage. Our key UW idea is Hindustan Unilever.