Consumer discretionary stocks shine in a weak mkt; Titan hits record high

Analysts expect discretionary players like D-mart, Titan, and Jubilant FoodWorks to record a stronger recovery in Q2FY22, led by faster unlocking and pent-up demand post the second wave

Shares of consumer discretionary companies were on a roll on Tuesday with most of the frontline firms trading at record high levels on expectation of strong improved earnings going forward. Analysts expect related companies to record a stronger recovery in July-September quarter (Q2FY22), led by faster unlocking and pent-up demand post the second wave.

Avenue Supermarts, the owner of D-Mart chain of retail stores, Titan Company, Jubilant FoodWorks, Indian Hotels Company, Oberoi Realty, Kajaria Ceramics, Barbeque-Nation Hospitality and Vardhman Textiles are some of the stocks that hit fresh record highs on the BSE in the intra-day trade today.

The S&P BSE Consumer Discretionary index also hit a new high of 6,019 points today. At 12:08 pm, the index was up 0.81 per cent, as compared to a 0.29 per cent decline in the S&P BSE Sensex.

On the discretionary side, most companies are likely to report growth on year on year (YoY) basis given low base and faster recovery post easing of lockdown restrictions. We expect 75-80 per cent recovery compared to pre-Covid levels, YES Securities said in a Q2FY22 earnings preview report.

Among individual stocks, Titan Company hit a new high of Rs 2,464, after the shares surged 4 per cent today. In the past three trading days, the stock has rallied 15 per cent after the company reported a strong 78 per cent YoY revenue growth in Q2FY22. Titan witnessed a strong recovery in demand across segments and overall store operational days exceeded 90 per cent during the quarter.

"Softening of gold prices (down 8 per cent QoQ), coupled with strong festive and wedding season, are expected to accelerate the growth trajectory from Q3FY22 onwards," analysts at ICICI Securities said in a stock update.

As regards the hotel sector, the brokerage firm expects Q2FY22 to witness a strong rebound in demand with a pick-up in activities and benefit of lower base effect. "Going forward, we expect the tourism demand to reach to pre-pandemic levels sooner than the estimated earlier as the government has allowed airlines to operate with 85 per cent capacity vs. 70 per cent earlier. Also, doors are now open for foreign tourists from November 2021 onwards to visit India that would drive revenues of premium segment hotel rooms," it added.

Shares of Avenue Supermarts, meanwhile, hit a new high of Rs 4,892 in the intra-day today. D-Mart, on Monday, joined the elite group of companies having market captialisation of Rs 3 trillion. Currently, the company's market capitalisation stands at Rs 3.08 trillion, BSE data shows. In the past one week, the stock has gained 12 per cent, as compared to a 0.39 per cent rise in the S&P BSE Sensex.

On October 4, D-Mart said it has reported a 46.6 per cent increase in its standalone revenue from operations at Rs 7,650 crore in Q2FY22. In the pre-pandemic July-September quarter of FY 2019-20, it had a revenue of Rs 5,949 crore. According to analysts, D-Mart could witness strong 47 per cent growth in topline on low base while a robust 15 per cent 2-yr revenue CAGR and stable margins could drive profitability growth.

That apart, shares of Jubilant FoodWorks surged nearly 8 per cent, hitting a record high of Rs 4,379 on the BSE. The stock surpassed its previous high of Rs 4,271 touched on September 17, 2021. Jubilant FoodWorks is India's largest food service company. Its Domino’s Pizza franchise extends across a network of 1,380 restaurants in 298 cities.

For April-June quarter (Q1FY22), the company had reported a consolidated net profit of Rs 69.06 crore, aided by higher revenues despite the second wave of Covid-19 disrupting operations. It had posted a consolidated net loss of Rs 74.47 crore in the same quarter last fiscal.

For Q2FY22, brokerage firm IDBI Capital expects Jubilant FoodWork’s revenue to grow 34 per cent YoY driven by strong recovery in discretionary consumption due to improvement in mobility. Gross Margin to decline 179bp YoY to 77 per cent due to increase in competitive intensity and inflationary raw material cost.

COMPANY	LATEST	ALL TIME HIGH	PREV HIGH	PREV DATE
Affle India	1206.45	1259.25	1259.00	11-Oct-21
Avenue Super.	4750.00	4892.20	4837.00	11-Oct-21
Barbeque-Nation	1217.80	1330.40	1271.10	17-Aug-21
Borosil Renew.	392.50	392.50	356.85	11-Oct-21
Cantabil Retail	647.00	682.65	681.10	11-Oct-21
Filatex India	123.40	127.50	124.50	08-Oct-21
GNA Axles	1044.50	1097.95	1083.90	07-Oct-21
Indian Hotels Co	214.55	218.90	211.55	11-Oct-21
Jubilant Food.	4294.80	4379.00	4271.00	17-Sep-21
Kajaria Ceramics	1274.65	1300.00	1300.00	27-Sep-21
Oberoi Realty	966.95	1003.25	996.75	11-Oct-21
Renaiss. Global	870.60	886.65	884.35	11-Oct-21
Saregama India	4329.00	4427.60	4294.00	16-Sep-21
Stove Kraft	1098.95	1115.00	1109.65	05-Oct-21
Titan Company	2463.00	2468.85	2429.00	08-Oct-21
Trent	1130.60	1142.00	1139.20	11-Oct-21
Trident	37.45	37.45	35.70	11-Oct-21
Vardhman Textile	2081.20	2107.15	2040.00	04-Aug-21
Welspun India	164.70	170.75	170.60	30-Sep-21