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Indian companies across multiple sectors have reported disappointing results in the second quarter of fiscal year 2025, notes a new JM Financials report. Consequently, their poor performance has triggered stock price corrections for affected companies. The brunt of this weaker than expected earnings was largely borne by consumer centric sectors like FMCG (fast moving consumer goods), retail, and auto, which slacked largely due to dampened urban demand. For instance, India's largest automaker, Maruti Suzuki, reported a 5% YoY decline in its total domestic passenger vehicle wholesales, largely on the back of pent-up inventory. Similarly, Honda reported a staggering 23% YoY dip in its total sales during October 2024. A recent report by Bernstein noted that around 48% of the companies listed on the NSE100 index missed their earnings estimate for Q2FY25, the highest since March 2020. Most companies have mentioned deteriorated domestic demand, urban slowing, macroeconomic risk, and margin pressures as the main reasons behind the dip. "The quarter's earnings have made investors nervous," noted the JM Financials report. The challenging environment stems from multiple factors: softening consumer demand, rising input costs, and companies' limited ability to increase prices. Moreover, this is not limited to just one quarter. Companies have been reporting weak, single-digit earnings growth for the last six consecutive quarters. Data from India Data Hub also suggests that corporate profits of listed companies plunged by as much as 3.4% during the quarter ended September 30, 2024. This is in stark contrast to the year-ago period, where they had shot up by over 40% The oil and gas sector had a difficult quarter, with refiners hit by weak margins and city gas distributors struggling with higher input costs. Financial institutions showed mixed results. While government-owned banks reported strong numbers, microfinance institutions and some private lenders faced massive difficulties with their unsecured loans. Most notable amongst this was the case of IndusInd Bank, which saw its net profits dip by 40% amidst burgeoning provisions, which climbed 87% to Rs 1,820 crore in Q2, as against Rs 974 crore reported in the year-ago period. <h2>Markets head southwards</h2>The selling trend by FPIs has dragged down the major Indian indices, the Nifty 50 and Sensex, both of which have dropped by around 8% since the beginning of this selling spree in October. According to National Securities Depository Ltd. (NSDL) data, FPIs offloaded equities worth a significant Rs 19,994 crore in just the first five trading sessions of November last week. The impact is clearly visible on Indian stock markets. Data suggests that while every sector in October closed the month in red, auto, oil and gas, and consumer durables were the most badly hit, each declining by as much as 10% during the month. Another indicator underlining the inherent weakness of the market was that the month saw only 242 stocks hit their 52-week high, significantly below the usual monthly average of 310.

India Inc. stares at an earnings dearth in Q2, FMCG, auto, and consumer durables falter

<ul><li>FMCG giant HUL’s shares reported a decline of over 6% on Thursday.</li><li>This comes a day after the company reported a 2.33% decline in consolidated net profit in Q2.</li><li>The stock tanked 6.59% to ₹2,483.95 on the NSE.</li></ul>Shares of FMCG major <keyword id="20002610" type="General" weightage="20" keywordseo="Hindustan-Unilever" source="keywords">Hindustan Unilever</keyword> Ltd (HUL) on Thursday tumbled over 6% after the firm reported a 2.33% decline in consolidated net profit for the second quarter ended in September. The stock tanked 6.59% to ₹2,483.95 on the NSE. The stock emerged as the biggest laggard among the Sensex and Nifty firms during the morning trade. Hindustan Unilever Ltd on Wednesday reported a 2.33% decline in consolidated net profit at ₹2,595 crore for the second quarter ended in September 2024, impacted by moderation in demand from the urban market. The company had logged a net profit of ₹2,657 crore in the July-September quarter a year ago, HUL said in a regulatory filing. However, revenue from product sales was up 2.36% at ₹15,703 crore in the September quarter, from ₹15,340 crore in the year-ago period, HUL which owns power brands such as Surf, Rin, Lux, Pond's, Lifebuoy, Lakme, Brooke Bond, Lipton and Horlicks said. "In the September quarter, <keyword id="21419477" type="General" weightage="20" keywordseo="FMCG-demand" source="keywords">FMCG demand</keyword> witnessed moderating growth in urban markets, while rural continued to recover gradually. In this context, we delivered a competitive and profitable performance," HUL CEO and Managing Director Rohit Jawa said. HUL reported an underlying sales growth of 2% and underlying volume growth of 3%. Total expenses were at ₹12,581 crore in the September quarter, up 3.03% year-on-year. HUL's total income, which includes other income, was up 2.14% to ₹16,145 crore in the September quarter of FY25. Addressing an earnings call, HUL CFO Ritesh Tiwari said, "Two thirds of our business we do in urban areas, and one-third we do in rural areas … we are seeing growth in the urban market moderating. We are seeing rural growth recovery is gradual … it impacts all the categories that we have." On the outlook, he said, "In the near term, we expect demand trends to be stable with no further acceleration in pace of growth." In this context, Tiwari said, "Our focus remains on driving competitive volume-led growth, while continuing investments behind our brands and strategy priorities … If commodity prices remain where they are, we expect a low single digit price growth in the near-term." With inputs from PTI. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/webstories/afcons-infrastructure-ipo-gmp-risk-factors-and-all-you-need-to-know/slidelist/114490954.cms">Afcons Infrastructure IPO – GMP, risk factors and all you need to know</a> <a href="https://www.businessinsider.in/tech/news/upi-refund-scam-to-digital-arrest-scam-here-are-most-common-online-scams-in-india/articleshow/114428011.cms">UPI refund to digital arrest scam, here are some online scams you need to be aware of</a> <a href="https://www.businessinsider.in/stock-market/news/waaree-energies-ipo-allotment-how-to-check-allotment-ipo-gmp-listing-date-and-more/articleshow/114508632.cms">Waaree Energies IPO allotment – How to check allotment, IPO GMP, listing date and more</a>

Hindustan Unilever shares tumble over 6% post Q2 results

As India’s start-up ecosystem matures, a new trend is emerging: <keyword id="23791918" type="General" weightage="20" keywordseo="micro-acquisitions" source="Orion">micro-acquisitions</keyword>. This approach – focussed on buying smaller businesses – has become increasingly popular among Indian entrepreneurs looking for cost-effective growth avenues. Platforms like <keyword id="23791917" type="General" weightage="20" keywordseo="flippa" source="keywords">Flippa</keyword> are at the forefront of this shift, facilitating these transactions by offering a user-friendly, data-rich environment where buyers and sellers can connect seamlessly. In a country that has seen rapid growth in entrepreneurship, micro-acquisitions represent a shift from the traditional emphasis on large scale deals. And this trend is being fuelled by an influx of domestic funds and micro venture capital (VC) firms dedicated to nurturing early-stage startups. <h2>Changing Mindsets: Why Micro-Acquisitions?</h2>Entrepreneurs are turning to micro-acquisitions for the flexibility, speed and cost-efficiency that they offer. By targeting smaller, less capital intensive deals, they are able to side step the complexities of a traditional M&amp;A, making it a viable pathway for expansion and growth. Besides these can also help entrepreneurs diversify their holdings and adapt to market demands without overcommitting resources. Flippa allows Indian entrepreneurs to access a global marketplace where they can identify businesses aligned with their objectives. <h2>The M&amp;A Landscape in India</h2>While the US mergers and acquisitions market has seen slower growth, private capital inflows in India are on the rise, according to <a href="https://www.pwc.com/gx/en/services/deals/trends/private-capital.html">PwC</a>. The second quarter of 2024 proved to be a landmark period for Indian startups, with a 57% year-on-year surge in megadeals driving fundraising to an eight-quarter high of $5.2 billion, as reported by <a href="https://www.dealstreetasia.com/reports/india-deal-review-q2-2024">Deal Street Asia</a>. Flippa has capitalised on this trend. A marketplace founded in 2009 for buying and selling online businesses, it has amassed over 3 million users worldwide. As of <a href="https://flippa.com/data-insights?buy_sell=PR_DataInsights_EmbedGraphs">October 2024</a>, Flippa had 396,000 active buyers on its platform with a combined wallet of $75 billion, an increase of 15,000 active buyers month-on-month. This broad, engaged user base gives Indian entrepreneurs a diverse pool of acquisition targets, from digital properties to app-based ventures. Notably, data-driven app acquisition companies like KalaGato leverage Flippa to identify the right opportunities. “If you’re trying to get into the market, a platform like Flippa is a great place to start,” said Aman Kumar, Founder of KalaGato. <h2>Cutting Edge Technology At Work</h2>Flippa’s technology sets it apart, using a proprietary <a href="https://flippa.com/product/recommender-engine">matching algorithm</a> powered by an AI-driven graph neural network that assesses over 100 factors to match buyers and sellers. This technology streamlines the acquisition process, helping entrepreneurs find suitable opportunities more efficiently, especially in a crowded market like India, where navigating business brokers or directly approaching potential sellers can be time-consuming and fraught with challenges. “Flippa as a platform is continuously evolving. Once you start looking at exits or the potential to exit a business, then a platform like Flippa is super useful,” Kumar adds, emphasising the platform's adaptability to the needs of modern entrepreneurs. Another standout feature is its <a href="https://flippa.com/product/deal-room">multi-user Deal Room</a>. This comprehensive digital sales hub allows users to manage the entire sales process for online businesses and digital assets in one place. Sellers can communicate with buyers in real time, filter messages, and review offers and Letters of Intent (LOIs) within the Deal Room itself. This organisation is particularly helpful for entrepreneurs who may be overwhelmed by the volume of inquiries when trying to sell their business. The Deal Room provides real-time notifications about buyer engagement, ensuring that users can respond promptly and keep negotiations moving forward. Buyers are invited to the Deal Room on a scheduled basis, creating a structured interaction environment. <h2>Prioritising Security and Trust</h2>A secure transaction environment is crucial, especially for entrepreneurs new to acquisitions. Flippa’s <a href="https://flippa.com/product/insurance">insurance</a> policies offer this layer of security for both buyers and sellers. The Buyer Protect policy safeguards buyers against financial losses resulting from seller misrepresentation or breaches of warranty, covering up to 100% of the enterprise value of the business. Meanwhile, the Seller Protect policy shields sellers from potential financial losses, creating a balanced environment for transactions. This dual protection reinforces trust and allows the involved parties to focus on growth without worrying about potential hidden risks. <h2>Market Insights for Informed Decision-Making</h2>To further assist users in making informed decisions, <a href="https://flippa.com/product/market-insights/">Flippa Market Insights</a> provides valuable data on online businesses and digital assets. This tool enables users to compare prices of similar businesses, benchmark performance metrics like average order value and customer lifetime value, and access real-time sales data, including historical performance information. Users can filter this data by time period, business model, and price point, ensuring they have the insights needed to navigate the acquisition landscape effectively. Flippa’s expert vetting team reviews the stated financial performance of every asset priced above USD $50,000, providing an additional layer of credibility to the listings. <h2>A Bright Future for Micro-Acquisitions in India</h2>With the Indian startup ecosystem thriving and the appetite for micro-acquisitions only expected to grow, Flippa stands at the forefront by connecting ambitious entrepreneurs with the resources they need to succeed. Whether you’re an established business owner looking to expand your portfolio or a newcomer eager to dip your toes into entrepreneurship, Flippa offers a wealth of opportunities in this exciting landscape. So, if you are interested in starting your exit journey, get a free valuation for your business here - <a href="https://flippa.com/free-valuation">get a FREE valuation</a>. Disclaimer: This article is generated and published by the Insider Studios team. You can get in touch with them on <a href="mailto:insiderstudios@businessinsider.in">insiderstudios@businessinsider.in</a>

The rise of micro-acquisitions in India: How Flippa is driving the trend

Luxury carmakers <keyword id="19980471" type="General" weightage="20" keywordseo="Mercedes-Benz" source="keywords" meta.keywordsubtype="org" meta.entityname="Mercedes-Benz" meta.hostid="153" meta.entityid="Mercedes-Benz">Mercedes-Benz</keyword>, <keyword id="19911529" type="General" weightage="20" keywordseo="Audi" source="keywords" meta.keywordsubtype="org" meta.entityname="Audi" meta.hostid="153" meta.entityid="Audi">Audi</keyword>, and <keyword id="19911528" type="General" weightage="20" keywordseo="BMW" source="keywords" meta.keywordsubtype="org" meta.entityname="BMW" meta.hostid="153" meta.entityid="BMW">BMW</keyword> are eyeing robust sales during the festive period this year with demand for <keyword id="20194571" type="General" weightage="20" keywordseo="High-end-cars" source="keywords">high-end cars</keyword> continuing to see an upward trend in India. In an interaction with PTI, Mercedes-Benz India MD and CEO Santosh Iyer said the luxury car segment is set for its best-ever performance this year with <keyword id="19894908" type="General" weightage="20" keywordseo="Festive-season" source="keywords">festive season</keyword> offtakes playing a major role in the overall performance. He noted that the festive season generally gives high double-digit <keyword id="20040491" type="General" weightage="20" keywordseo="Sales-growth" source="keywords">sales growth</keyword>, helping the automaker to average out single-digit growth of the earlier quarter. "So in that sense, on an average, then we are able to get a double-digit growth during the festive season," Iyer stated. Elaborating on the overall industry, which still remains a very small part of the overall passenger vehicle market in the country, he said the segment is headed for record volumes this fiscal year but not all players are witnessing growth." Some (companies) are even degrowing, some are flat and they are facing headwinds, but because we are the primary player in the market, we still feel the luxury car market should cross 50,000-51,000 cars this year," Iyer said. The luxury car market in India currently remains very small accounting for less than 2 % of the overall passenger vehicle market in the country. Audi India Head Balbir Singh Dhillon said the automaker anticipates positive buying trends to continue during the festive season. "Our best-selling models - the A4, A6, Q3, Q3 Sportback, Q5, Q7, and the newly launched Q8 - continue to drive robust demand," he added. The company is equally optimistic about the e-tron range, the e-tron GT and RS e-tron GT, Dhillon said. BMW Group India President Vikram Pawah said the fundamentals of the Indian economy are sturdy and consumer confidence in the luxury segment is on the rise. "For BMW Group India, the order bank is solid and we are trying our best to speed up deliveries for our customers. Along with additional bookings around Diwali and Dussehra, we are confident of closing the year on a high note while clocking impressive growth," he stated. He noted that the group is witnessing very strong demand for products across all segments. Pawah said that in the run-up to the festive season, the company has introduced several special editions of its existing model range. The festive season usually commences with Onam and ends with Diwali every year.

Luxury carmakers Mercedes, Audi, BMW expect robust sales this festive season

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Good morning! With the holidays just around the corner, it might not hurt to earn a little extra cash. Four people with side-hustle experience <a target="_blank" href="https://www.businessinsider.com/side-hustle-recommendations-passive-income-content-creation-amazon-etsy-2024-10">shared tips on their top gig recommendations</a>.In today's big story, betting on the presidential election is all the rage. <a target="_blank" href="https://www.businessinsider.com/election-betting-odds-trump-vs-harris-polymarket-kalshi-robinhood-2024-10">Can it keep the momentum going</a>?What's on deck:<ul><li>Markets: Blackstone's boss thinks Trump <a target="_blank" href="https://www.businessinsider.com/finance-ceos-supporting-trump-blackstone-steve-schwarzman-citadel-ken-griffin-2024-10">would be a better president the second time around</a>.</li><li>Tech: Google's earnings <a target="_blank" href="https://www.businessinsider.com/google-third-quarter-earnings-report-q3-2024-2024-10">were a big hit with investors</a>.</li><li>Business: What a Trump or Harris win <a target="_blank" href="https://www.businessinsider.com/housing-affordability-supply-impact-presidential-election-scenarios-homebuyers-harris-trump-2024-10">means for the cost of housing</a>.</li></ul>But first, wanna bet?If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today">sign up here.</a><h3 id="7fa5f018-5b05-4a37-a8dc-d3f89138bcb3">The big story</h3><h2 id="5fd547b9-ec52-41fc-8e08-4f4b27dd8097">Presidential bets</h2><div type="image" title="Kamala Harris and Donald Trump with dice" height="812" width="1083" msid="114782269" hostid="261" sizebytes="50032"></div>We're less than a week from election day, but one group can already claim victory: betting markets.Platforms allowing users to bet on the US presidential race have become the <a target="_blank" href="https://www.businessinsider.com/election-betting-odds-trump-vs-harris-polymarket-kalshi-robinhood-2024-10">surprise star of election season</a>, writes Business Insider's Matthew Fox. And it could eventually change how we view any potential outcome, not just future elections.Kalshi, which has attracted more than $100 million in election-related bets, is currently one of the most popular apps in the Apple App Store. The trading app Robinhood also <a target="_blank" href="https://www.businessinsider.com/presidential-election-betting-robinhood-legal-odds-2024-10">got in on the action</a> on Monday.Kalshi's <a target="_blank" href="https://markets.businessinsider.com/news/stocks/betting-us-election-cftc-kalshi-legal-battle-prediction-market-2024-10">legal victory in October over the CFTC</a> to offer election betting paved the way for the trend. But predictions markets are also spiking abroad where they've existed for years.Polymarket, which is not available to US citizens, has seen $2 billion in wagers this month, up from $533 million in September, according to The Block. Last year, the website averaged less than $20 million in monthly trading volume.The rise of election-betting markets hasn't been without controversy.A "whale" trader betting on former President Donald Trump to win the election grabbed headlines and drew conspiracy theories. Polymarket <a target="_blank" href="https://www.businessinsider.com/polymarket-donald-trump-betting-odds-whale-french-trader-harris-polls-2024-10">confirmed the user was a French national</a> with trading experience betting on Trump "based on personal views of the election."<div type="image" title="A young man in the center of a $100 bill" height="1500" width="2000" msid="114782272" hostid="261" sizebytes="563774"></div>The betting market's biggest tests might come after the election.Supporters of prediction markets say they're <a target="_blank" href="https://markets.businessinsider.com/news/stocks/trump-harris-prediction-markets-polls-presidential-election-polymarket-024-8">more accurate than traditional polls</a>, citing their ability to quickly adapt to the latest news and the fact participants are invested in the outcome.This election will serve as a good test of that theory, as there's a wide gap between the two approaches. Betting markets have Trump as a heavy favorite, whereas traditional polls indicate a tight race.Should Trump win in a landslide, it could strengthen the case for using betting markets as a key tool for election analysis. Nate Silver, one of the most well-known polling analysts, is already an advisor to Polymarket.But a presidential race only happens once every four years. What about the rest of the time?If the past few years have taught us anything, <a target="_blank" href="https://www.businessinsider.com/gambling-young-men-sports-betting-crypto-meme-stock-market-addiction-2024-4">this country loves to gamble</a>. From crypto to meme stocks to sports, young men, in particular, are happy to bet on just about anything.Prediction markets' business model can lean into that theme. On Kalshi, you can currently wager on whether the Tesla robotaxi will be released before 2026 or if the US will ban TikTok before May.<h3 id="77f31a4c-8462-4e3d-a71f-838cb79493fb">News brief</h3><h2 id="1fcd294b-3f53-425f-9f20-4093e8623b59">Top headlines</h2><ul><li>Why Boeing's $21 billion share sale is <a target="_blank" href="https://www.businessinsider.com/boeing-capital-raise-ecm-bankers-bonuses-wall-street-comp-expert-2024-10">an early Christmas present for Wall Street</a>.</li><li>How Trump vs. Harris is <a target="_blank" href="https://www.businessinsider.com/wall-street-political-contributions-by-name-for-trump-vs-harris-2024-8">playing out on Wall Street</a>.</li><li>The Fed is likely to disappoint markets with just one more rate cut this year amid global inflation, <a target="_blank" href="https://www.businessinsider.com/fed-cut-rates-inflation-powell-blackrock-ceo-larry-fink-2024-10">BlackRock CEO says</a>.</li><li>Microsoft just ramped up its cloud rivalry with Google by <a target="_blank" href="https://www.businessinsider.com/microsoft-google-shadow-campaigns-cloud-regulation-undermine-business-azure-2024-10">accusing it of 'shadow campaigns'</a>.</li><li>Snap <a target="_blank" rel="noopener" href="https://www.businessinsider.com/snap-surges-gets-major-boost-from-ai-push-paid-users-2024-10">surges 10%</a> as it gets a major boost from AI and paid subscribers.</li><li>Google's been on an efficiency drive. Its new CFO said it can '<a target="_blank" rel="noopener" href="https://www.businessinsider.com/google-earnings-q3-2024-new-cfo-boost-efficiency-2024-10">push a little further</a>.'</li></ul><h2 id="8120060b-ae66-48dc-b149-f0489a30ffa2">3 things in markets</h2><div type="image" title="Mark Zuckerberg speaking on stage." height="1600" width="2870" msid="114782278" hostid="261" sizebytes="38034"></div><ol><li>Wall Street has high hopes for Meta. Thanks to the company's AI optimization, analysts generally <a target="_blank" href="https://markets.businessinsider.com/news/stocks/meta-q3-earnings-preview-meta-stock-price-ai-growth-guidance-2024-10">expect positive figures</a> from Meta's third-quarter earnings report today. Bank of America has said the stock is a top AI pick, and investors are keeping an eye on AI growth opportunities.</li><li>Citadel's playing the long game with its shorts. Justin Lubell, the hedge fund's global equities head, said the firm's longest-running equities group made more money shorting stocks than its long-term investments in recent years. Lubell said the strategy benefits from <a target="_blank" href="https://www.businessinsider.com/why-citadel-focuses-on-shorting-stocks-according-to-justin-lubell-2024-10">the lack of competition on the short side</a>.</li><li>Two of Wall Street's top executives speculate on Trump's bid for a second term. Blackstone CEO Steve Schwarzman, who has endorsed Donald Trump, thinks the former president <a target="_blank" href="https://www.businessinsider.com/finance-ceos-supporting-trump-blackstone-steve-schwarzman-citadel-ken-griffin-2024-10">would be "efficient and effective" during his second go around</a>. Fellow billionaire and Republican mega-donor Ken Griffin expects Trump to win next week.</li></ol><h2 id="f4b54806-7f81-450c-ba32-92560d4fae9b">3 things in tech</h2><div type="image" title="A Linkedin logo sitting on a short stack of applications next to a large stack of applications" height="1500" width="2000" msid="114782270" hostid="261" sizebytes="192558"></div><ol><li>Can LinkedIn save us from hiring hell? The platform wants to help job-seekers apply smarter, not harder, by using AI to optimize the process. The goal is quality over quantity: LinkedIn hopes you'll apply to fewer jobs, but the ones you'll swing for <a target="_blank" href="https://www.businessinsider.com/hiring-broken-linkedin-ai-fix-fewer-jobs-resume-spammers-2024-10">will be better matches</a>.</li><li>Amazon Web Services' Graviton chips are thriving. In 2018, AWS launched Graviton, its own line of homegrown central processing unit chips for data-center servers. Now, <a target="_blank" href="https://www.businessinsider.com/aws-graviton-chips-used-by-90-percent-top-1000-customers-2024-10">90% of AWS's largest server customers have become Graviton users</a>, a company executive told BI.</li><li>Five Apple Intelligence features you can try out now on your iPhone. Some of the highly anticipated AI tools include one that helps summarize long messages, one that limits disruptions, and another that can <a target="_blank" href="https://www.businessinsider.com/apple-intelligence-features-tested-on-iphone-16-pro-max-2024-10">edit randos out of your photos</a>.</li></ol><h2 id="9260fa45-d397-4b3c-b4f8-4bb193976216">3 things in business</h2><div type="image" title="Harris and Trump." height="1600" width="2400" msid="114782274" hostid="261" sizebytes="312674"></div><ol><li>How a Trump or Harris presidency could impact what you pay for housing. Affordable housing is one of America's top economic concerns heading into the election. Here's how each candidate's proposed policies would affect housing supply, first-time home buyers, urban vs. rural housing, and <a target="_blank" href="https://www.businessinsider.com/housing-affordability-supply-impact-presidential-election-scenarios-homebuyers-harris-trump-2024-10">action against big landlords</a>.</li><li>Alphabet surpassed its third-quarter earnings expectations. <a target="_blank" href="https://www.businessinsider.com/google-third-quarter-earnings-report-q3-2024-2024-10">Google's parent company delivered beats on revenue</a>, earnings per share, its advertising business, and Google Cloud revenue. The search giant is all-in on AI — <a target="_blank" href="https://www.businessinsider.com/google-earnings-q3-2024-new-code-created-by-ai-2024-10">CEO Sundar Pichai said</a> more than a quarter of the company's new code is created by AI and then checked by employees.</li><li>Is X being influenced by Elon Musk or its users? Musk is self-proclaimed "super MAGA." And X, the social media platform he owns, is more likely to show content from right-leaning accounts, according to reports by The Washington Post and The Wall Street Journal. But it's unclear whether the platform is showing users what they want to see or <a target="_blank" href="https://www.businessinsider.com/elon-musk-donald-trump-twitter-x-wsj-washington-post-2024-10">what Musk wants them to see</a>.</li></ol><h2 id="9f5d80ac-3466-429f-a50a-2ffbb70c65ff">What's happening today</h2><ul><li>Meta, Microsoft, Starbucks, and other companies report earnings.</li><li>The Bureau of Economic Analysis publishes Q3 economic growth data.</li></ul>The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Milan Sehmbi, fellow, in London.

Betting on the election is the hottest new trend. But can prediction markets keep the momentum going?  

The <keyword id="23021375" type="General" weightage="20" keywordseo="domestic-passenger-vehicle-industry" source="keywords">domestic passenger vehicle industry</keyword> volumes declined by low single digit in August 2024 as compared with August 2023, because of weak retail demand trends and higher <keyword id="21396778" type="General" weightage="20" keywordseo="inventory-levels" source="keywords">inventory levels</keyword> at the dealerships according to Kotak Institutional Equities. The report suggests that the major reason for the sluggishness in sales of tractors is the uneven spatial distribution of rainfall, particularly in northern and eastern regions. It also highlights that growth will pick up in the coming months on the back of <keyword id="23021373" type="General" weightage="20" keywordseo="improved-monsoon" source="keywords">improved monsoon</keyword> conditions. The upcoming festive season will also improve the situation as traditionally it is a peak period for auto sales. Strong festive demand could help offset some of the losses experienced in the first half of the fiscal year. The weak wholesale figures in August were driven by private vehicles (PV), commercial vehicles (CV) and tractor original equipment manufacturers (OEM). Retail sales declined in single digits (yoy) for most of the companies. The PV segment saw a low single-digit decline in domestic wholesale volumes year-on-year (YoY) in August 2024, driven by weak retail demand and elevated inventory levels at dealerships, which stood at approximately 70 days. The retail sales fell by mid-single digits YoY during the month. Maruti Suzuki India Limited (MSIL), the largest player in the segment, reported a 4 per cent YoY drop in total volumes, including a 5 per cent decline in domestic sales but it was partially offset by a 6 per cent rise in the export volumes. MSIL's wholesale market share is estimated to have slipped by 250 basis points YoY to approximately 40.5-4 per cent says the report. Other major players also faced challenges in sales. Tata Motors recorded a 3 per cent YoY decrease in PV volumes, while Hyundai Motors reported an 8 per cent drop. However, Mahindra &amp; Mahindra (M&amp;M) bucked the trend with a 16 per cent YoY increase in PV volumes, and Toyota India posted a significant 37 per cent YoY growth on low volumes. Kia and MG Motors also experienced an uptick in sales. The two-wheeler (2W) segment showed resilience with high single-digit YoY growth in domestic wholesale volumes, largely driven by channel filling ahead of the festive season. Retail sales of the internal combustion engine (ICE) two-wheelers grew by mid-single digits YoY, while electric two-wheeler (EV 2W) sales surged by 41 per cent YoY, propelled by new mass-market EV launches and attractive discounts. Among the key players, Hero MotoCorp (HMCL) saw a 5 per cent YoY rise in volumes, and TVS Motor reported a robust 14 per cent YoY increase, with growth in both domestic and export segments. Bajaj Auto's volumes grew by 18 per cent YoY, driven primarily by domestic sales. However, Royal Enfield faced a 5 per cent YoY decline in volumes. Going forward, the report highlighted that the Commercial Vehicle (CV) segment underperformed during the month, with domestic volumes declining by low double digits YoY, primarily due to weakness in the Medium and Heavy Commercial Vehicle (MHCV) truck and Light Commercial Vehicle (LCV) segments. Tata Motors experienced a 15 per cent YoY drop in domestic CV volumes, with sharp declines in Small Commercial Vehicle (SCV) cargo (down 23 per cent) and MHCV trucks (down 15 per cent). Ashok Leyland also reported a 7 per cent YoY decline in CV volumes, while VE Commercial Vehicles (VECV) managed a modest 1 per cent YoY increase. In August, the domestic tractor segment remained flat YoY with volumes coming in 5-6 per cent. During this period, M&amp;M's tractor volumes grew by 1 per cent YoY, while Escort Kubota's volumes remained unchanged compared to the same period last year. The report says that strong festive demand could help offset some of the losses experienced in the first half of the fiscal year, particularly if economic conditions and consumer sentiment improve.

Auto Industry sales to surge on the back of improved monsoon, festive season demands: Report

<ul><li>FMCG companies are expected to register strong margins in Q1 as they will see the full effect of earlier-taken price hikes playing out. Cooling raw material prices will help. </li><li>Demand for staples have been stable, but the beauty and personal care category has not yet recovered fully. </li><li>The summer has seen a decline or low growth in ice creams and juices due to unseasonal rains. </li></ul>With cooling raw material costs, the FMCG sector is expected to kick in the first quarter of FY24 with ‘good quality’ profits, backed by improvement in margins. Input costs have been cooling over the last few quarters and have either remained stable or seen mild moderation, and companies have not been passing them off very generously in the form of price cuts. “We expect most of the companies to register stronger sequential gross profit margin (GPM) improvement in 1Q24F with input cost inflation cooling down further, high-priced inventory getting consumed and the full effect of earlier-taken price hikes playing out,” said a research report by Nomura. Certain categories such as hair oils, edible oils and soaps had witnessed price cuts in earlier quarters, which will flow through in the first quarter, as per BNP Paribas. Also, new price cuts and promotions were seen in laundry, edible oils and other home care categories during the quarter but no major price cuts were seen in biscuits and salts. Double digit revenue growth expected Price cuts and volume growth for the sector are directly proportional for the sector, and as of now most of growth seen in the sector was pricing-led. But that’s changing, analysts say. Demand from urban areas has been stable, with slight sequential improvement in rural demand as well. Also, the demand for staples have been stable, but the beauty and personal care category has not yet recovered though improving due to the price cuts. All in all, the sector should be able to present a good revenue growth for the quarter – notwithstanding the cooler summer this April-June with unseasonal rains that affected sales of juices and ice creams. “We estimate staples/discretionary (ex-ITC) pack to register 10.2%/8.8% revenue growth. We expect a good quarter from Nestle, Godrej Consumers and ITC and a weak print from Marico,” says a report by Kotak. Antique Stock Broking also expects the FMCG sector (not including ITC) to report early double digit revenue growth with moderation in pricing led growth. ITC is expected to see a fall in revenue as its agri business is expected to see a drop due to high-base effects. Nomura expects Nestle, Tata Consumers and Dabur to report the highest revenue growth YoY, and with ITC and Marico to post lower value growth. FMCG sector revenue growth projections YoY <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Company </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nomura </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Kotak Institutional Equities </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Antique Stock Broking </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HUL </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;"> 9.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ITC </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-6.1% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.6%* </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-6% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Marico </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4.2% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">4% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Dabur </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9.4% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">9% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Godrej Consumer </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10.2% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata Consumer Products </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">11.3% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">12.5% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">NA </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nestle India </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15.7% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16.6% </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16% </td></tr></tbody></table>Source: Research reports *Kotak has considered standalone results for ITC Price cuts &amp; rising competition The street will closely watch management commentary on pricing, as analysts believe that the sector is poised for a good show in the first half of FY24 with a raw material cost tailwind. “However, in the second half of FY24 we expect revenue growth to moderate as pricing benefits should fade and growth would have to be volume-led,” said a report by BNP Paribas. There has been no aggressive price war as of now in the sector as of now, but if price cuts are not taken by large players in the segment, it might lead to unorganized players gaining market share. In the last one year, many consumers have ‘downtraded’ to unbranded products or local brands during periods of high inflation. “Prices of most stock keeping units (SKUs) have increased sharply over the last two years. Soap and detergent prices have risen 40-50% over that period. So far the price cuts have been limited and largely confined to the value segment. We believe price cuts might be needed to drive volumes,” said BNP Paribas. Without pricing strategies laid out, most FMCG players might see revenue growth challenges re-emerge this year, especially in the second half. SEE ALSO <a href="https://www.businessinsider.in/business/corporates/news/it-companies-like-tcs-infosys-wipro-hcl-tech-q1-2023-24-earnings-preview/articleshow/101482733.cms">IT sector Q1 earnings preview: All eyes on deal wins, revenue guidance cuts</a> <a href="https://www.businessinsider.in/thelife/news/want-your-veggies-to-taste-like-chocolate-a-vr-glass-may-help-trick-your-mind/articleshow/101487079.cms">Want your veggies to taste like chocolate? A VR glass may help trick your mind</a>

FMCG sector Q1 preview — Caught between price cuts and volume growth

Encouraged by volume growth, margin improvement and recovery in rural sales, India's top fast-moving consumer goods (FMCG) companies are now back to their normal growth cycle as they step up investments as well as spending on advertising and marketing. <keyword id="84065" type="General" weightage="20" keywordseo="fmcg-companies" source="Orion">FMCG companies</keyword> are chasing volume growth again after a gap of a few quarters, offering higher grammage and price cuts thanks to inflationary pressures softening on key raw materials for everything from soaps to food items. Hindustan Unilever (HUL), Dabur, Marico, Godrej Consumer Products, ITC, Tata Consumer Products and Nestle reported volume recovery in the March quarter and said they expect a gradual pickup in consumption in FY24. "The prospects of a sustained recovery have strengthened. After five quarters of volume decline, the sector has posted volume growth," Marico MD and CEO Saugata Gupta said in the company's earnings conference call. "Urban consumption has been steady while rural is showing some convincing signs of having bottomed out." Foods continue to drive growth for the sector, while the home and personal care segment also entered positive territory after an extended slowdown. Marico, which owns popular brands like Saffola, Parachute and Livon, reported an 18.7 per cent increase in its consolidated net profit to Rs 305 crore for the fourth quarter ended March 2023 while sales rose 3.65 per cent to Rs 2,240 crore, driven by single-digit volume growth and moderation in commodity prices. HUL said rural areas have shown improvement with higher value growth sequentially. While HUL's volumes continue to fall, the extent of decline has reduced versus last quarter. "The slowdown in the FMCG market is bottoming out. This improvement was led by volumes, which have turned flat in this quarter, versus a mid-single-digit decline in the December quarter," said HUL CFO Ritesh Tiwari in its earnings call. The makers of popular brands such as Rin, Lux, Surf Excel and Pond's said it expects the price-volume growth to rebalance further. "We expect volumes to recover gradually due to high levels of cumulative inflation and the fact that consumption habits typically recover with a lag," he said. For the March quarter, HUL reported an increase of 12.74 per cent in its consolidated net profit to Rs 2,601 crore. Net sales rose 10.83 per cent to Rs 14,926 crore. However, HUL warned the near-term operating environment is likely to remain volatile due to global slowdown risk and uncertainty related to weather phenomena like El Nino and heatwaves. Abneesh Roy, Nuvama Group Executive Director for Institutional Equities, said the outlook for the <keyword id="495979" type="General" weightage="20" keywordseo="fmcg-industry" source="Orion">FMCG industry</keyword> was "positive" with volume growth and improvement in margins for most companies in FY24. "As raw material prices are cooling off, companies shall start paring prices via grammage increase or gradual price reductions. Price growth shall ease while volume growth will improve," he said. Roy also cautioned about the impact of El Nino and the "aggression" from billionaire Mukesh Ambani-led Reliance Industries Ltd, a known disrupter, which aims to be a big player in the USD 110-billion FMCG segment. Meanwhile, Godrej Consumer reported an 11.47 per cent increase in its India revenue to Rs 1,822.92 crore in the March quarter. This was led by volume growth of 11 per cent. Its home care segment, which consists of household insecticides and air fresheners, grew 14 per cent and 17 per cent, respectively. "We expect to build on the current momentum and deliver volume-led growth along with upfront marketing investments and improvement in profitability," said its Managing Director and CEO Sudhir Sitapati. Britannia Executive Vice-Chairman and Managing Director Varun Berry also expressed optimism. "Volume growth will be certainly much better than this year," he said. On commodity prices, Berry said there is deflation in prices of palm oil, laminates and corrugated material for packing but flour and milk prices are soaring. "There are certain brands and certain packs where we have already initiated price reductions or promotions," he said. In the March quarter, Britannia reported a 47.53 per cent jump in consolidated net profit to Rs 557.60 crore. Its revenue from operations rose 10.93 per cent to Rs 3,892.02. Similarly, Dabur reported volume growth of 11 per cent during the March quarter and 14 per cent for FY23. Its quarterly net profit was Rs 292.76 crore and revenue from operations stood at Rs 2,677.8 crore. "Despite near-term concerns around inflationary pressures, we plan to accelerate the growth momentum by continuing to invest in brand building, innovation, and capabilities that will drive growth," said Dabur India CEO Mohit Malhotra. Other companies also recorded growth. ITC's revenue from the FMCG segment rose 19.34 per cent to Rs 4,951.17 crore from Rs 4,148.62 crore while EBITDA jumped 76 per cent. Nestle, the maker of Maggi, Kitkat and Nescafe, reported an increase of 24.69 per cent in its net profit to Rs 736.64 crore in the March quarter. Sales rose 20.43 per cent to Rs 4,808.40 crore. Tata Consumer reported a 21.12 per cent rise in its consolidated net profit to Rs 289.56 crore. Its revenue from operations was up 13.96 per cent at Rs 3,618.73 crore. Tata Consumer said it recorded growth in the India beverages business and food. It had a "strong margin growth and strong topline growth driven both by volume and price," the company said in its earnings call. "We have started seeing volume growth coming back. The impact of inflation and monetary tightening on economic growth and demand seems to be slowing down, but I would keep my fingers crossed and monitor it closely," said Tata Consumer MD and CEO Sunil D'Souza. "In the near term, we are seeing stability." SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/zomato-net-loss-narrows-to-188-crore-in-q4-revenue-rises-70-yoy/articleshow/100358894.cms">Zomato net loss narrows to ₹188 crore in Q4, revenue rises 70% YoY</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/mankind-pharma-pnb-among-stocks-to-become-largecap-from-midcap-mutibagger-rail-vikas-nigam-to-turn-midcap-from-smallcap/articleshow/100356527.cms">Mankind Pharma, PNB among stocks to become largecap from midcap; mutibagger Rail Vikas Nigam to turn midcap from smallcap</a>

FMCG makers expect sustained recovery in volume and margins with price reduction in FY24

<ul><li>Inflation has been eating into the purchasing power of lower and middle income groups with many essentials’ sales falling.</li><li>Majority of the upper and upper middle class respondents saw their household incomes go up more than inflation.</li><li>There is a dichotomy seen in online festive sales too as premium products are bought with discounts and purchase options say experts. </li></ul>There are two Indias within the great sub-continent. One where the day-breaking drink of tea has become dearer for many this year and the other half is doubling down on wine purchases. Neither of them are affected by the base effect of last year. <keyword id="2653343" type="General" weightage="20" keywordseo="tea-sales" source="Orion">Tea sales</keyword> were down last year too, and <keyword id="806378" type="General" weightage="20" keywordseo="wine-sales" source="Orion">wine sales</keyword> were up — darkening the ‘K’ line on economic recovery charts. Madan Sabnavis, the chief economist of Bank of Baroda calls it a schizophrenic pattern of consumption. “Sales are doing better in categories where price does not matter,” he tells Business Insider India. <div type="image" title="grocery demand" msid="104810160" hostid="261" caption="&amp;lt;p&amp;gt;Source: Pixabay &amp;lt;/p&amp;gt;"></div> It’s discretion not price The categories of goods where price matters are seeing low growth in output – a reflection of demand. Some of the casualties are detergent powders, groundnut oils, shampoos and hair dyes. Their output fell between April to August 2023, compared to the year before, as per BoB economics research. Inflation has a more indirect effect on these purchases. For example, tea and shampoo saw moderate inflation but their demand fell. Inflation was high in coffee, toothpaste and soaps but their demand grew. “The generalized inflation factor has been at work where real income has come down thus leading to lower purchasing power,” said BoB. In a survey conducted by UBS, about 46% of respondents said that they’re buying less personal care and packaged food compared to last year. For purchase of home care products, the respondents were largely neutral versus last year, it added. India’s largest FMCG player Hindustan Unilever with a large presence across rural and urban India has seen a direct impact of it in the quarter that ended in September 2023. Its overall urban volumes grew 3% and rural volumes fell 1%. “Rural recovery is likely to remain gradual,” the company said in its investor presentation indicating that the situation might not see any dramatic recovery in the coming months. Rural India saw reverse migration during the pandemic, but not all of them have gone back, opines Sabnavis. A chunk of downtrading is also being seen in urban areas amongst income groups that are facing the heat of inflation, experts add. At the other end This is, however, only one half of the story. At the other end, many Indians are not blinking while making discretionary purchases. A majority of the upper and middle class respondents – 65% – surveyed by UBS, saw their household incomes go up more than inflation. “The top 20% of the population account for the bulk of discretionary consumption. The survey results support our view that affluent consumers‘ income levels are holding up, as reflected in corporate wage growth that continues at double digits,” said UBS. Lalit Jhawar, co-founder and CEO, LandCraft Retail says that high-end gourmet products in urban areas have been steadily increasing over the last few years. He owns a luxury gourmet retails store- Food Square in Mumbai, which sells cheeses, truffles, caviar, artisanal breads and all the other international food items. “Affluence in urban areas has grown, resulting in a larger number of consumers with higher discretionary income,” Jhawar tells Business Insider India. Online sales: A story of dichotomy Another sign of higher spending is seen in the e-commerce festival sales. The first week of the many festival discount sales saw ₹47,000 crore worth of goods being sold, which is 19% higher than last year, says Redseer Consulting. Online sales, which now sees a good measure of metro and demand from Tier 2 and Tier 3 cities, is showing a dichotomy as well, say experts. “Two Indias have come into play where one India is saving up and waiting for prices to come down to clinch a good deal on premium products. On the other hand, there are low-value product sales i.e value-for-money purchases that are being bought more frequently,” said Abhishek Tandon, engagement manager at Redseer Strategy Consultants. The sale season, which is manna for bargain hunters, is also enthused by the number of Buy Now Pay Later and EMI options. “When it comes to big ticket purchases, premiumization is bolstered by financing options and discounts that make it affordable,” adds Tandon. In the pre-festive period between April and August,however, most consumer durable sales were in a negative zone, due to the high-base effect of last year, says Bank of Baroda’s report. Refrigerators, mobiles, readymade garments all showed a negative output – also indicating that discounts play a large role in discretionary purchases. Indian consumers have always been complicated and price has always played a big role in purchase decisions, choice of brands and more. But it’s no longer a linear story. One end of the market, driven by affluence, is veering towards premium purchases. The other end is looking for ways to survive with less in hand as inflation is eating into their purchasing power. SEE ALSO <a href="https://www.businessinsider.in/stock-market/news/mamaearth-this-fmcg-scion-is-all-set-to-gain-a-windfall-from-honasa-ipo/articleshow/104721052.cms">This FMCG scion is all set to gain a windfall from Honasa Consumer IPO</a> <a href="https://www.businessinsider.in/careers/news/genzs-millennials-wants-to-be-back-to-offices-even-as-costs-pinch/articleshow/104700780.cms">GenZs, millennials want to be back to offices even as costs pinch</a>

Wine vs Tea: India’s consumption trends show a sharp divergence

<ul><li>Volume contraction for the FMCG sector was more pronounced in rural areas, says a <keyword id="87153" type="General" weightage="80" keywordseo="bnp-paribas" source="Orion">BNP Paribas</keyword> report. </li><li>While the research firm expects margin improvement in FY24, its earnings estimates are below consensus on account of INR depreciation, increase in ad spends and selective price cuts. </li><li>We think consensus earnings estimates for FY24/25 are too optimistic, the report says. </li><li>The valuation multiples of Indian FMCG companies have expanded since June 2022, BNP Paribas says. </li></ul>Consumer goods majors have been hit hard by inflation over the last few quarters, with volume growth taking a backseat. Clearly, growth has been driven by multiple price hikes that were taken by the players – and not volume growth. The road ahead looks better as commodity prices are cooling and price cuts could even spur consumption. In spite of the fact that affluent India’s consumption is holding up well, volumes from mass-market and categories that benefitted from Covid like healthcare and hygiene segments <a href="https://www.businessinsider.in/finance/article/inflation-burns-a-hole-in-the-pockets-of-indias-lower-income-households-from-fmcg-goods-flip-flops-to-crackers-consumption-takes-a-backseat/articleshow/95536971.cms">were affected by inflation</a>. “Revenue growth was driven by price hikes, with volumes remaining subdued across categories. The volume contraction was more pronounced in rural areas. Companies expect rural demand to recover in the second half of FY23, on the back of government interventions, a good monsoon and higher crop realisations,” says BNP Paribas. Ad spends and price cuts Going forward, BNP shares the optimism of the companies that the second half of the current financial year will bode well for revenues and margins too as commodity prices are moderating. “While we expect margin improvement in FY24, our earnings estimates are below consensus as we anticipate INR depreciation, an increase in advertisement spends and selective price cuts to drive volumes that are under pressure,” said the research firm. Lower ad spends in addition to a cut in corporate tax rates have been aiding the sector’s earnings growth for the last five fiscal years in spite of muted growth in revenues and gross profits. But now ad spends might resume to bring back consumers who have been downtrading to cheaper unbranded products for the last six months, leaving little scope for a strong margin recovery. Lower estimates, pricier stocks BNP Paribas raised its sales estimates for most companies during the earnings season but lowered the aggregate EBITDA margin for the sector by 30 bps to 20.9-22.1% for FY23 and FY24 – thereby reducing EBITDA as well as earning per share by 1-2% for both the years. “While the outlook for FY24 is positive, driven by moderation in raw material costs and signs of a <keyword id="9592296" type="General" weightage="20" keywordseo="rural-recovery" source="Orion">rural recovery</keyword>, we think consensus earnings estimates for FY24/25 are too optimistic. With no triggers for a sharp multiple de-rating, we believe some stocks can see time correction over the next year. Our preferred sector picks remain ITC, Britannia, Emami and Jubilant Foodworks,” said the report. Most FMCG stocks have been on a bull run in the last five months, and that has made them expensive relative to the tough conditions that await for its volume growth. “Since June 2022, the valuation multiples of Indian FMCG companies have expanded as concerns about unabated inflation eased. This has led to several stocks moving above their five-year mean next twelve months, price to earnings ratio,” the report said. The downside risks that the research firm sees include an increase in competitive intensity, leading to companies cutting prices and sales growing at a lower-than-expected rate; and lower-than-expected margin recovery. Rural recovery to be affected by muted Kharif season Many economists and rating agencies are also questioning the pace of economic growth of the country – marred by <a href="https://www.businessinsider.in/finance/news/no-end-to-downgrades-in-gdp-estimates-as-economists-remain-divided-on-severity-of-slowdown/articleshow/95847763.cms">constant downgrades</a>. Apart from global spillovers, experts believe that a lot is riding on the rural recovery – that will play a big role in the volume and revenue growth of FMCG majors. While there have been green shoots of recovery seen in <a href="https://www.businessinsider.in/business/auto/news/mixed-demand-trends-for-autos-in-november-as-festive-boost-wears-off-but-signs-of-rural-recovery-visible/articleshow/95848505.cms">spurts like auto sales</a>, rural consumption has remained muted even after lockdowns ended. A major driver for rural recovery is a good Kharif crop, which, however, has been affected by erratic monsoons this year. “Untimely heavy rainfall in the states across North-west and Central India between end-September 2022 and mid-October 2022 is likely to have added to the moisture levels of the standing crop, which poses some downside risks to the kharif output relative to the first Advance Estimates,” said an ICRA report. SEE ALSO <a href="https://www.businessinsider.in/business/news/vikram-kirloskar-the-mit-engineer-who-loved-to-build-factories/articleshow/95875911.cms">Vikram Kirloskar: The MIT engineer who loved to build factories</a> <a href="https://www.businessinsider.in/business/corporates/article/tatas-mega-aviation-merger-is-poised-for-flight-but-the-skies-are-not-clear-yet/articleshow/95526116.cms">Tata's mega aviation merger is poised for flight, but the skies are not clear yet</a>

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