COVID19- Industry Impact Series Part 1

Hello Friends,

To understand the impact of COVID-19 across sectors, below is the summary of my discussion with my friends in Industry. As I said earlier, the summary should be taken with pinch of salt as the situation is evolving on an hourly basis.

FMCG :

  • Raw material and production not a big issue – Main issue is movement of goods – slowing down overall supply chain
  • Current utilisation for players like (HUL, Britannia, Dabur) is around20-30% but likely to go up to 60% by next week
  • Segment specific:
    • Staples will manage growth (Would not see degrowth on YoY full year numbers basis)
    • Discretionary will be hit badly given slow comedown
    • Retail will be in

 

Teleco, Infra:

  • Data Traffic has increased by 30-40% (Global average), India has been around 40-45%
  • Pre COVID Infra was operating at optimum capacity (80%)
  • Infra is chocked. Ways to optimise:
    • Reduction of quality of videos of Online streaming apps – Netflix, Amazon Prime etc.
    • Undertake few technological measures to release the bandwidth

 

On Fund Flows:

  • Sovereign funds from middle east is selling right left and centre due to Crude weakening

 

General Insurance:

  • COVID – assumption 100,000 infected patients (Overall) > Insurance penetration ~10% > Relevant cases 10k
  • Auto OEM in lockdown mode, no movement in this segment for the whole Industry
  • Positive triggers:
    • No movement of Automobile – Reduction of claims, loss ratio should be very much favorable – should be able to offset the cash burn of the segment
    • Tele calling – Health Insurance, lot of inbound queries
  • Life Insurance companies can get General Insurance licence as well (Under Committee’s review – 2months time) – Competitive intensity will increase (More players) if this happens

 

Stay Safe!

Cheers – Anuj Khandelwal

 


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