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
