First up, your read through of the earnings so far, United Spirits, Colgate, specifically weaker side.
Yes this quarter if you see a lot of these kind of companies have seen a challenging volume growth also. So, for example, companies like Pidilite, Asian Paints, suffered in October month because there was very high rainfall in a festival period. What we have gathered is definitely in the months of November and December, there is a revival and we expect in Q4 the volume growth for Pidilite and should be better than the Q3 numbers.
Also, these companies will see expansion in the gross and EBITDA margins further because the full benefit of the falling raw material and rupee also is now strengthening a bit. So imported raw material, you will see that benefit in Q4 and FY24 for these kind of companies.
For Colgate and United Spirits the numbers were quite challenging. So clearly in their case, the competitive intensity and the raw material pressure and slightly the rural demand is also challenging for Colgate.
I think that remains a concern. In Colgate, we continue to see and track the actions by the new MD Prabha. But I think it will take time for her steps and efforts because FMCG is clearly very competitive and definitely
and Unilever are also quite aggressive in the oral care also.
So yes, overall challenging, our top picks will be
, , and Asian Paints at this level. I think most of the correction is already done. So from here on I think most of the earning growth recovery and volume growth recovery will be seen in Q4 and FY24.I want to talk about one thing that in terms of expectations that you see from , GCPL or Dabur, volume growth are not much. You are saying that we will expect to see the recovery coming in Q4 but what about the rural growth because nothing that is very positively come in terms of that growth that we are seeing over there. So would not that be a bigger concern then.
Absolutely. When I referred to the volume growth recovery, I was referring to Asian Paints and Pidilite because they had suffered in the October month because of rainfall. In terms of the staples companies, clearly rural slowdown continues. We had released a report in fact one month back itself that in Q3 and Q4, as of now, no big structural recovery in rural is happening. Yes in Q3 the rural slowdown is not as big as seen in the first half of the year that is entirely because of the base effect. Unilever did highlight that there are some green shoots emerging in terms of the rural, but my sense is the deflation has to be seen in fertiliser and the diesel prices and, of course, the monsoon has been challenging in UP, Bihar, Jharkhand Bengal. So next monsoon, if it is good and we have a good crop yield, I think then only the rural recovery should happen in FY24. So you are absolutely right FMCG, rural demand remains challenging and urban is what is growing faster.
Let us talk about something positive then because there is still weakness when it comes to rural recovery, but urban consumption is firing and that is quite visible by the kind of advance bookings that we have seen for Pathaan. Very critical because Q4 is otherwise a seasonally weak quarter and stock of PVR has not been doing much. Do you expect Pathaan to cause a bit of revival in the stock interest.
Yes I think so because it will give confidence and comfort to the investors also. So yes Hindi movies in particular past few quarters have been extremely challenging. There was a course correction needed because content definitely was not appealing to the viewers.
In the same timeframe, we have seen the content and some of other regional content and even movies like Avatar do exceedingly well. So it is not that the viewers don’t want to go to the movie screens. We expect OTTs and movie screens both to co-exist and both should do well. Why Pathaan is doing well is, of course, Shah Rukh Khan movies coming after four years. Second in terms of the negative publicity on some of the song and other things I think that has also created a lot of the social buzz and media buzz also.
See, ultimately, it is all about content. So if content is good, after the initial first three days which is looking very good, I think then it will boil down to content. But yes you are absolutely right, the bookings have been extremely strong. It is breaking many of the records for a Hindi movie in terms of the first day booking, first day collection, it has been extremely strong. We expect almost 45-50 crore kind of collection on the first day and the first five days the benefit is there are three holidays in the five days so that again helps. So, we expect almost 150 to 200 crore India collections in the first five days given the pent up demand for Shah Rukh Khan movie and good buzz and very strong booking.
So yes, urban demand currently if the content is good, we are seeing multiplexes do really well. But Hindi movies clearly course correction is needed in terms of the cost structure and in terms of the differentiated content which has been missing.