Consumer sector seen de-growing by 2-4%

Highlights

Mumbai: The coronavirus lockdowns and the resultant disruptions in demand and supply will see the consumer sector de-growing by 2-4 per cent this fisca...

Mumbai: The coronavirus lockdowns and the resultant disruptions in demand and supply will see the consumer sector de-growing by 2-4 per cent this fiscal, says a report.

However, the impact will be much larger, to the tune of 30-40 per cent, if the lockdowns continue beyond the first quarter, Crisil said in its report on Wednesday.

It added that the crippling impact of the pandemic will trigger a rush by private equity players who will be keen to take over the most distressed companies, given the changing consumer priorities to health and wellness.

"The disruption in demand, production and supply chain caused by the extended nationwide lockdown to contain the Covid-19 pandemic will knock back revenue growth by 2-4 per cent for the consumer essentials sector, and 16-30 per cent across discretionary manufacturing and consumer services this fiscal," the report said.

However, it warned that "this is only in the base-case scenario of the lockdown ending in the first quarter. In case of extended vulnerability due to fresh extension of the lockdown into the second quarter, the fall could be a steeper 30-40 per cent." It further said discretionary segments like appliances, ready-mades and quick service restaurants will be hit the hardest and see steepest revenue plunge under both scenarios and their stretched working capital cycles will put further squeeze on liquidity, impacting profitability.

What is more, these segments will also take the longest to recover post-lockdown, while discretionary spending will take at least a year to recoup.