Elara Capital expects over 20% growth in EBITDA for FMCG universe
The FMCG sector has witnessed a mixed bag of results in the recent quarter. While Dabur's performance brought a pleasant surprise, Marico faced challenges due to a decline in edible oil prices. Meanwhile, ITC's strategic pricing of its hotel business and the anticipated growth in its cigarette segment demonstrate the company's resilience and ability to capture market opportunities.
Amit Purohit, Vice President of Elara Capital, recently shared his insights on the performance of the fast moving consumer goods (FMCG) universe. In an interview with CNBC-TV18, Purohit expressed optimism, expecting a significant improvement of over 20 percent in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the sector.
Among the key updates in the FMCG space, Dabur's quarter one business update emerged as a positive surprise. The company showcased strong performance, exceeding market expectations. Investors and analysts were pleased with Dabur's ability to navigate challenging market conditions and deliver favorable results.
“The hit has been Dabur. It talked about some signs of rural recovery which came in as a positive surprise and that was encouraging,” he said.
On the other hand, Marico's quarter one update fell slightly short of expectations. The company faced a mild miss in their performance, primarily attributed to a sharp decline in edible oil prices. Despite this setback, Marico remains a resilient player in the industry and is expected to rebound in subsequent quarters.
“The miss was on the Marico side, to some extent but this was more to do with sharp decline in edible oil prices, which has pulled down the value growth for Marico – edible oil prices are down by 30 percent at the MRP level,” he said.
In the hospitality sector, ITC's hotel business has been priced at an attractive rate of Rs 7 per share. This move by the company has garnered attention from investors and industry observers, as it presents a promising opportunity for potential growth and value creation.
“The hotel business we account for Rs 7 per share and that is already there in the numbers. From an analyst’s perspective, we are building in the hotel business separately in our numbers,” he said.
Furthermore, there are positive expectations for ITC's cigarette business this quarter. Analysts predict low teens volume growth, indicating a potentially strong performance in this segment. This projection reflects ITC's ability to adapt to market dynamics and capitalize on changing consumer preferences.
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(Edited by : C H Unnikrishnan)
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