Aggregate reported revenue growth of consumer staples companies under Kotak Institutional Equities’ coverage fell to 5.2% in the September quarter (Q2FY24), marking the fourth straight quarter of drop in the measure.
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On a like-for-like basis, growth stood at 4.6% last quarter. Growth was bogged down by price cuts. Moreover, price hikes in the base are adding to the woes. Companies reported a delay in rural recovery. Plus, there is continued pressure from local competition in select categories such as tea, detergent bars, and biscuits on easing input prices.
Having said that, the gross margin recovery is comforting. According to Kotak, the gross margin of consumer staples companies expanded by 515 and 160 basis points (bps) year-on-year and quarter-on-quarter, respectively. This was led by Jyothy Labs Ltd, Godrej Consumer Products Ltd and Marico Ltd, gross margin for which expanded year-on-year by 870 bps, 700 bps and 685 bps, respectively. One basis point is 0.01%.