HUL, ITC, Marico Are Nomura's Top Consumer Picks As It Sees Price Hikes Supporting Growth In 2025

Hindustan Unilever Ltd., ITC Ltd. and Marico Ltd. are among Nomura's top India picks in the consumer sector for 2025. The research firm expects resurgence in price hikes that could bolster overall sales growth in the sector.

While volume growth may remain subdued in the first half of 2025, Nomura sees a price-led recovery taking shape for the Indian consumer sector. Consumer stocks are currently trading at relatively reasonable valuations and could benefit from an easing inflationary environment and targeted policy support, it said.

The key consumer sectors are poised for growth, driven by price increases and a gradual recovery in rural demand. The firm expects a modest improvement in consumer demand, particularly in rural areas, backed by strong monsoon seasons and robust agricultural harvests. However, urban demand continues to show weakness, due to low wage growth and ongoing inflationary pressures.

These are Nomura's top 'buy' calls in the sector.

• Marico: Marico, with a market capitalisation of $9.6 billion, continues to show promise, benefiting from its strong brand portfolio and pricing power. Nomura has set a target price of Rs 760 per share, which implies an upside of 19% from its current price of Rs 638.

• Hindustan Unilever: One of India's leading FMCG companies, HUL, is another top pick for Nomura. The company has demonstrated resilience and brand strength, it said. The research firm has a 'buy' rating on the stock, with a target price of Rs 3,100 apiece, offering an upside potential of 29.1% from its current price of Rs 2,401.

• ITC: With a diversified portfolio spanning FMCG, hotels, and agri-business, ITC remains an attractive investment. Nomura has set a target price of Rs 575 apiece, representing a 27.9% upside from its current trading price of Rs 450.

Middle-income urban households are expected to continue facing pressure due to high inflation in essential categories like housing and food. As a result, Nomura predicts that urban consumption will remain weak, and volume growth will be limited. Despite this, premium categories such as skin care, jewellery, and higher-end goods are likely to continue performing well, benefiting from the K-shaped recovery that has characterised recent consumer trends, it said.

On the supply side, organised players in the FMCG sector are likely to recover market share from unorganised regional brands, which are struggling with high raw material costs and thin margins, Nomura said. Furthermore, competition from direct-to-consumer brands is expected to ease, as these brands face challenges in scaling profitability.

For the consumer sector overall, Nomura is optimistic about the return of price hikes, which will support sales value growth in 2025. Companies will likely continue to implement gradual price increases to offset raw material inflation without risking a significant volume decline. However, margin expansion may be limited, as most consumer companies are expected to focus more on driving market share, rather than aggressively pursuing margin gains.