will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
Competition to intensify as new product launches gather momentum
New product launches are gathering momentum. P&G has launched Oral B
toothpaste, a long awaited launch. ITC has entered high growth Deodorant segment
with Engage brand; it has also launched Vivel Cell Renew range of personal care
products. HUL has launched TIGI and Lakme Youth Infinity. Dabur has launched Real
Supra fruits and Real Activ drinking Yoghurt in foods and Gel Bleach in personal care.
We note that most of the new launches are on the premium end despite trend of
slowdown in discretionary spends and setback to premiumisation in the past couple
of quarters.
Prefer ITC in large caps and Britannia in midcaps
Consumer sector has seen a sharp re-rating in the past 12 months as defensive bet in
an otherwise slowing economy. In addition to the long-term consumption story,
steady growth and strong cash flows have aided P/E multiple expansion even as
volume growth has slowed down considerably. We believe that normal monsoons
will keep the rural demand strong, while a meaningful pick up in urban demand is
some time away. Implementation of food security bill can increase the disposable
income at the bottom end and boost volumes. ITC and Britannia are our top picks in
the space.
LAB Prices are ruling firm, up 5% YoY
140.0
130.0
120.0
113.1 114.1
121.1
(Rs/Kg)
110.0
100.0
90.0
90.1
86.1
109.1
80.0
70.0
79.1
60.0
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Source: Bloomberg, PL Research
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