Hawkins Ad spends in Q2-2015 up 10%; marketing spends likely to rise in Q3-2015

BENGALURU: Hawkins Cookers Limited (Hawkins) reported a 10.3 per cent quarter on quarter (q-o-q) increase in advertisement (ad) spends in Q2-2015 at Rs 3.72 crore (2.5 per cent of Total Income from Operations or TIO) as compared to the Rs 3.37 crore (3.5 per cent of TIO) in Q1-2015 and almost 6.5 times more year on year (y-o-y) versus the Rs 0.58 crore (0.4 per cent of TIO) in Q2-2014. Going by the trends during the preceding two years, (in Q3-2013 and Q3-2014 ad spends were significantly higher than Q2-2013 and Q2-2014 ad spends respectively) the company’s ad spends are likely to be higher in Q3-2015.

Note: 100,00,000 = 100 lakh = 10 million = 1 crore

Over a 10 quarter period starting Q1-2013 until Q2-2015, the company’s ad spends show an increasing trend in absolute rupees as well as in terms of percentage of TIO.

Hawkins advertisement and sales promotion spends (ASP) in this report comprises advertisement expenses and discounts. In Q2-2015, Hawkins ASP at Rs 14.12 crore (12.1 per cent of TIO) was 80.6 per cent more than the Rs 9.88 crore (10.2 per cent of TIO) in Q2-2015 and 37.1 per cent more than the Rs 13 crore (10.1 percent of TIO) in the corresponding year ago quarter. The company’s ASP shows a linear increasing trend over the 10 quarter period under consideration in this report.

The company’s ‘discounts’ in Q2-2015 at Rs 14.12 crore (9.6 per cent of TIO) was more than double (2.17 times) the Rs 6.51 crore (6.7 per cent of TIO) in Q1-2015 and 13.6 per cent more than the Rs 12.43 crore in Q2-2014. Since the period in Q3 of a year has the Indian festivals season that has most brands offering huge festival price reductions and freebies, it is likely that the ‘discounts’ by company will be higher in Q3-2015. Overall, discounts’ shows an increasing linear in terms of percentage of TIO and in absolute rupees. Please refer to Fig 1 below.

Hawkins TIO in Q2-2015 at Rs 147.5 crore was 51.7 per cent more than the Rs 97.2 crore in the immediate trailing quarter and 14.8 per cent more than the Rs 128.46 crore in Q2-2014. Over the 10 quarter period under consideration in this report, the company’s TIO shows an increasing linear trend. It’s Q2-2015 TIO has been the highest across the 10 quarters.

Hawkins reported 74.3 per cent increase in PAT at Rs 12.32 crore (8.4 per cent of TIO) from Rs 7.07 crore (7.3 per cent of TIO) in Q1-2015, but a 10.3 per cent decline from the Rs 13.75 crore (10.7 per cent of TIO) in Q2-2014. Over the 10 quarter period under consideration, the company’s PAT shows a linear increasing trend both in terms of absolute rupees and in terms of percentage of TIO. Please refer to Fig 2 below.

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