FLASHNOTE

CONSUMERGOODS
FLASH Cosmeticssetforamakeover
IndiaEquityResearch|ConsumerGoods

AsperlatestASSOCHAMstudy,thedomesticcosmeticsindustryissetto double to INR200bn by 2014. This spurt can be credited to specialized products,increasingworkingwomenspopulation,highadvertising,rising fashion consciousness and rising disposable incomes. Also, the largely untapped Indian male consumer segment is likely to post explosive growth in cosmetic use. With Indias per capita cosmetic and toiletries consumption 40x lower than that of Hong Kong, and half of China, and aggressive rural expansion by companies, this segment is set for tremendousgrowth.WeexpectHindustanUnilever(HUL),Dabur,Emami, ITCandMaricotobekeybeneficiaries. Themakeover:Domesticcosmeticsindustrysettosurge2xby2014
InacountrywidesurveybyASSOCHAM,ofthe~6,000consumers,65%teenagerssaid theirbrandedcosmeticconsumptionhasjumped~75%inthepast10years.Improved purchasing power, rising fashion consciousness, increasing influence of fashion & film industryandhugeadswillcatapultIndianconsumergoodsfromanINR100bn(in2011) toINR200bnindustryby2014.

Powergirls:Workingwomenhavehigherpurchasingpower
Asperthesurvey,workingwomenintheagegroupof30andabovehavemorecash, aremoreconsciousoftheirappearanceandlookforlifestyleorientedproducts.Hence, theyaremoreopentobuyinghigherpricedproducts.

Themetrosexual:Malegroominglargelyanuntappedopportunity
Accordingtothesurvey,maleteenagershaveincreasedtheiraverageexpenditureon cosmetics by over 300% in the past 10 years, which can be attributed to growing awarenessandWesterninfluence.75%maleteenagershaveincreasedexpenditureon cosmeticstoINR3,0004,000permonthagainstanaverageofINR1,000in2000.

Refreshingchange:Spasegmentsetforaninvigoratingsurge
The spa segment in India is finding favour with urban population. Not only has the numberofspassurgedoverthepastfiveyears,butalsoservicesandproductsonoffer have grown. Also, rising health consciousness is likely to boost the herbal cosmetic industrys growth to 12%. This is likely to be positive for Kaya, which is expected to breakevenbyFY13.
AbneeshRoy
+912266203141 abneesh.roy@edelcap.com

Outlook:Robust
We expect the cosmetics segment to be one of the key drivers apart from foods segment of consumer demand. Favourable macroeconomic drivers such as GDP and populationgrowth, coupledwithrisingincomelevelsandlifestylechangeswillfurther boostgrowth.
EdelweissResearchisalsoavailableonwww.edelresearch.com, 1 BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

HarshMehta
+912240635543 harsh.mehta@edelcap.com

December8,2011 EdelweissSecuritiesLimited

ConsumerGoods
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VikasKhemani NischalMaheshwari HeadInstitutionalEquities HeadResearch vikas.khemani@edelcap.com nischal.maheshwari@edelcap.com +912222864206 +912266233411

(INR)

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