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India is spending more as note ban impact fades and GST sinks in



ET Intelligence group: Consumption is reviving as the effect of demonetisation fades and companies get used to the goods and services tax (GST), with some recording multi-quarter highs in volume and sales in the October-December period, exceeding street expectations.

They include Jubilant Food-Works and WestlifeBSE -0.17 % Development in quick service restaurants (QSR), Titan in jewellery, Maruti SuzukiBSE -0.47 % in cars and Page Industries in apparel, among others. The buoyancy has allowed some to raise prices without eroding demand. Meanwhile, personal loans have assumed a bigger share of business for banks.

Jubilant FoodWorks and Westlife Development reported same-store sales growth (SSSG) rose to a 21-quarter high in the October-December period. The total organised QSR industry is around Rs 10,000 crore and is expected to see a compounded annual growth rate of 22% in the next four years. Jubilant Food-Works is the India franchisee for Domino’s Pizza and Dunkin’ Donuts.

Westlife is the McDonald’s franchise for the west and south through its Hardcastle Restaurants unit. SSSG growth for Jubilant FoodWorks in the December quarter was 17.8%, compared with low-single-digit expansion in the previous 15 quarters. Jubilant’s orders improved owing to the combination of new customers and repeat orders by older ones.

Westlife Development posted SSSG growth of 20.7% in the December quarter. According to CLSA, the company’s growth was the highest in the QSR industry. The management attributed this to higher footfalls and consumer-led menu innovation. Westlife’s annual report said it had 200 million footfalls in FY17, up 8.1% from FY16.

Titan’s jewellery revenue grew 29% in the first nine months of FY18, with SSSG expansion at 24%. Revenue at Titan’s Eye Plus spectacle unit rose to 23%, the highest in 10 quarters. Titan has guided for revenue growth of 25% in FY18 and FY19. Titan said in a call that its average ticket size has been increasing and growth in new customers outstripped repeat customers.

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PC Jeweller had SSSG growth of 25% in the December quarter, which helped it post 40% revenue growth. Apparel sales also reflect a broad spending revival. Leisurewear was the fastest-growing segment in the last three quarters for Page Industries, India’s franchisee for Jockey, at 20% in the October-December period, aided by 13% volume growth and 7% realisation. The company was able to hike prices thanks to positive consumer sentiment.

In the automotive sector, Maruti Suzuki and Eicher Motors as well as leading battery and tyre makers raised prices by 1-10% in the past three months. Average discounts on cars have been dropping in the past two years as demand improves — to Rs 17,600 in the December quarter compared with more than Rs 24,000 two years ago. Maruti said in the post-December quarter earnings call that enquiry levels had risen 20% from the year earlier.

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