Volume growth at 3 per cent was mainly on account of inventory correction and delay in winter. Adjusted for these, the volume stood around 5 per cent. There are some signs of recovery in volumes and it seems that muted volume growth scenario has bottomed out. Company over the years has gained market share in 90 per cent of its product portfolio. Ebitda margin impacted due to one-time expenses towards employee cost (₹39 crore). During the quarter the sales growth was impacted due to excise benefit going off at some manufacturing plants.
We believe operating margins would continue to improve on back of benign cost environment. Volume growth would improve on back of promotion offers and improvement in demand. The company’s ability to manage operating performance through use of different levers is encouraging. We believe as long as the operating performance continues to remain strong, P/E multiple is unlikely to derate. We have revised our estimate downward by 3 per cent to factor in lower revenue growth as company passes on some benefit to consumer.