Jewellery and Footwear Lead Growth
Gaurav Jogani from JM Financial Institutional Securities in an interview to ET Now highlighted that the jewellery segment drove significant growth, largely due to gold prices rising 65% year-on-year. “Apart from this, the footwear segment was a surprise. Casual premium footwear players grew in the mid-teens, and grocery players also performed well. Apparel had a mixed bag performance due to an early festive season shift and a delayed winter,” he noted.
QSR Players Adjust to Consumer Trends
The quick-service restaurant (QSR) sector continues to stabilize, but growth is largely driven by pricing strategies. Jogani explained, “Most QSR players have started to drive value through discounts and combo offers. While transactions have stabilized, price discounts are leading to lower same-store sales growth.”
Margins and Cost Rationalisation
Margins in the QSR space have been better than expected, aided by cost-cutting measures and rationalization of unnecessary discounts. “Gross margins improved, and cost management led to better than expected margins. We expect this trend to continue into Q4, though sequentially margins may dip as it is a non-seasonal quarter,” Jogani added.
Balancing Discounting and Brand Equity
On the impact of discounting on long-term brand value, Jogani observed, “The intensity of discounting has reduced. Players are now focusing on value combos to drive footfalls. This has helped improve gross margins while sustaining consumer interest.”
Company Highlights and Sector Outlook
Among discretionary stocks, Titan remains a strong performer, demonstrating robust topline growth despite gold price volatility. “Titan is driving EBITDA growth in a calibrated manner, leading to earnings upgrades,” Jogani said. Footwear brands have shown signs of revival, and the sector may benefit from GST transitions extending to smaller discretionary items.
Valuation Perspectives
Valuations across QSR and discretionary sectors have corrected from historical highs, with downside limited, according to Jogani. “If SSSG growth rates revive, we could see a bottom in valuations and earnings,” he said.Competition and Industry Consolidation
Jogani downplayed the threat from regional cloud kitchens, pointing out consolidation in the sector due to macroeconomic pressures and funding constraints.
Key Metrics to Watch
For the upcoming quarter, same-store sales growth and brand contribution margins will be the primary focus, along with sustained cost rationalization and advertising efficiencies.
Top Picks in the Sector
Highlighting preferred stocks, Jogani identified Titan, Lenskart, Metro Brands, and Vishal Mega Mart in the discretionary space. In QSR, Devyani and Sapphire remain recommended buys.
