Stocks

Festive season mood to aid sales growth in second quarter

Priya Kansara Mumbai | Updated on January 08, 2018 Published on October 04, 2017

After encouraging year on year (y-o-y) sales growth of most automobile companies in September, hopes of a better festive season are building up on companies that derive substantial part of their annual revenues from the festive season (September and December quarters).

Stock prices of small appliances companies like V-Guard Industries, Havells India, Bajaj Electricals and Crompton Greaves Consumer Electricals are gaining momentum in past few trading sessions.

Select jewellery and paint companies like Titan Company, PC Jeweller, Asian Paints and Berger Paints have also trading in positive zone also because gold and crude prices are under pressure due to dollar strengthening.

These companies derive total 40-50 per cent of their annual revenues (20-25 per cent each) from second (September) and third (December) quarter. Hence good performance in these two quarters has definitely helped property up annual sales.

For example , 31 per cent and 11 per cent y-o-y sales growth in September and December quarter respectively led to 61 per cent jump in FY17 revenues for symphony. Similar is the trend for v-guard industries.

This time, it's not only festive season but also restocking post GST, which will be reflected in September quarter. HDFC securities pointed out in a report on v-guard industries that the company witnessed restocking benefits mid July and expects healthy growth in September quarter.

"The company also enjoyed benefits of the festive season as Onam affected the company positively as it witnessed mid revenue growth. Management is hopeful for better growth in the upcoming festive season," It said.

The current (December) quarter will also have lower base of demonetisation, which happened in November last year. Out of 12 companies' universe considered for the analysis, 5-7 companies (including the above) have had a lower base in the two quarters. This means that they have either reported y-o-y decline or lower single digit growth in sales last year. Hence consensus expectation is that previous and current quarter will be good for the companies.

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Published on October 04, 2017
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