Bullish On Trent, Bearish On HUL — Morgan Stanley Turns Selective In Consumer Space
The brokerage believes these are positioned to outperform, and underperform, the broader market over the next 15 to 45 days as earnings momentum, valuation resets and input-cost trends play out.
Morgan Stanley has outlined a set of short-term tactical ideas across India’s consumer sector. It has flagged stocks it believes are positioned to outperform, and underperform, the broader market over the next 15 to 45 days as earnings momentum, valuation resets and input-cost trends play out.
On the positive side, the brokerage sees scope for a rebound in Trent Ltd, which has underperformed the market in recent months. The stock is down about 8% over the past three months versus a 6% rise in the Sensex.
Morgan Stanley expects 18% year-on-year growth in Trent’s fashion business in the December quarter and 17% consolidated revenue growth. After the correction, valuations at around 72x forward earnings are now closer to discretionary retail peers, leading the firm to see a high probability of near-term upside.
A similar recovery thesis underpins its view on Page Industries Ltd, which has fallen 17% in three months. With December-quarter revenue growth expected to improve sequentially to 6% and volumes accelerating, the brokerage notes that the stock’s valuation — well below its five-year average — could re-rate as earnings momentum returns.
Morgan Stanley is also constructive on Aditya Birla Lifestyle Brands Ltd, expecting sequential improvement in performance and around 10% revenue growth, aided by better trends across lifestyle and allied brands.
In staples and beverages, the firm remains positive on Marico, citing strong revenue growth driven by pricing and easing copra costs, which should support margin recovery. The stock has already outperformed peers, but Morgan Stanley believes further gains are possible as results stay ahead of the sector.
Varun Beverages is another preferred name, with expectations of upbeat management commentary around 2026 growth and optionality from portfolio expansion keeping the risk-reward favourable.
Among consumer discretionary names, Titan Company remains a relative outperformer. Despite sharply higher gold prices, Morgan Stanley expects strong festive-led jewellery growth in the December quarter, with stable-to-improving margins supporting continued stock strength.
Jubilant FoodWorks is seen as a near-term earnings play, with solid same-store sales growth likely to reverse recent stock underperformance.
However, the brokerage turns notably cautious on several heavyweight consumer names where near-term triggers appear limited.
Britannia Industries is expected to underperform the broader market despite steady revenue growth. While biscuits are widely seen as beneficiaries of GST rate cuts, Morgan Stanley believes the stock will remain range-bound. The firm maintains its Equal Weight stance, citing a lack of immediate catalysts.
Caution also extends to FMCG majors Dabur and Hindustan Unilever. For Dabur, Morgan Stanley points to a slow pace of demand recovery and relatively weak performance versus peers, even as margins inch up. Hindustan Unilever is expected to post the lowest revenue growth among FMCG peers in the December quarter.
In paints, Berger Paints is flagged as vulnerable to continued underperformance. Morgan Stanley expects December-quarter revenue growth to trail management guidance and lag peers, particularly Asian Paints, based on dealer checks and weaker volume trends.
The brokerage is most concerned about Avenue Supermarts, where near-term growth has softened meaningfully. Despite management’s long-term focus on aggressive store expansion, Morgan Stanley notes that current revenue growth trends and extremely rich valuations leave little room for disappointment.
