Investor Presentation_ India Consumer – Our Order of Preference

Summary of Key Points from the Investor Presentation on India Consumer Sector Industry Overview - The consumer sector in India is currently under pressure due to ongoing market corrections and low growth rates among companies [1][3] - Preference is shifting towards Food & Beverages (F&B) over Home & Personal Care (HPC), with mass discretionary segments better positioned for recovery compared to staples [1][2] Core Insights 1. F&B vs. HPC: The growth narrative for F&B is expected to become less negative compared to FY25, indicating a potential recovery in mass discretionary spending [1][2] 2. Discretionary Spending: There is a focus on backing market leaders in discretionary retail, particularly in tier 2 markets, which are seen as better positioned than tier 1 markets [1][2] 3. Competitive Landscape: Increased competitive intensity in the paint segment is noted, with a derating of certain stocks unlikely to pause [2][3] Key Stock Recommendations - Overweight (OW) Recommendations: - Tata Consumer: Positioned as a preferred F&B play with a focus on volume growth and market share [6][24] - ITC: Stable cigarette volume growth expected, benefiting from a favorable regulatory backdrop [30][32] - Trent: Anticipated high growth in mass discretionary retail, with sluggish growth viewed as temporary [6][37] - Titan: Positioned well in the mid-premium segment, expected to navigate challenges related to gold and diamond prices [6][45] - Jubilant Foodworks: Strong strategic decisions leading to impressive growth in the mass discretionary segment [6][51] - Underweight (UW) Recommendations: - Asian Paints: Facing changing industry dynamics with a potential for continued derating [2][6] - Nestle India: Valuation concerns noted, with a need for more growth levers [6][27] - DMart: Growth strategy not yet fully unfolded despite not being disrupted [6][27] Consumption Environment - The expectation of a strong wedding calendar in Q4 is anticipated to drive growth in the FMCG sector, particularly in rural areas [8][15] - Price-led growth is becoming a significant factor in FMCG, with various commodities showing price fluctuations [10][11] Financial Projections - Tata Consumer: Projected revenue growth of 17% in FY25, with a CAGR of 13% from FY24 to FY27 [27][28] - ITC: Expected revenue growth of 9% in FY25, with a stable cigarette EBIT growth of 10% [32][33] - Trent: Anticipated revenue growth of 17% in FY25, with a significant expansion in store numbers [43][44] - Titan: Projected revenue growth of 25.9% in FY24, with a CAGR of 18% expected [47][50] Additional Insights - The gap between discretionary and staple categories is narrowing, indicating a shift in consumer preferences [12][17] - The competitive landscape in the retail sector is evolving, with tier 2 cities showing robust growth potential compared to tier 1 cities [58][59] This summary encapsulates the key insights and projections from the investor presentation, highlighting the current state and future outlook of the India consumer sector.