FMCG Stock Picks: BofA Favours Titan, United Spirits, Marico; Flags Risk In DMart

Bank of America remains selective on the consumer sector, ahead of the March quarter results, naming Titan Co., United Spirits Ltd. and Marico Ltd. as its top picks while flagging caution on Avenue Supermarts Ltd.

Among companies showing double-digit topline momentum are Marico, Varun Beverages Ltd., United Spirits and Tata Consumer Products Ltd., the brokerage said. However, it flagged that DMart is facing earnings and valuation pressures amid heightened competitive intensity.

Broader trends remain stable but a meaningful recovery is still elusive, according to BofA. It expects Indian consumer space to witness similar trends as last quarter, pointing to largely unchanged year-on-year trends across staples and discretionary segments.

The brokerage expects around 7% year-on-year Ebitda growth and flat to moderate revenue gains for most names in its coverage. While pricing growth in staples is improving, it is still trailing earlier forecasts, and cost pressures are hurting margins across the board—excluding alcoholic beverage companies.

Key callouts:

• Titan: Strong discretionary play. Jewellery revenue rose 25% year-on-year in the fourth quarter, led by 15% like-for-like growth and double-digit gains in studded jewellery. Performance stood out despite high gold prices and a weak macro backdrop.

• Marico: One of the few staples showing consistent topline momentum, BofA said. The company is among names with double-digit growth alongside Varun Beverages Ltd., United Spirits and Tata Consumer Products Ltd.

• United Spirits: Alcohol segment is expected to have a better quarter overall. BofA estimates 16% year-on-year Ebitda growth, aided by both sales and margin expansion.

• Varun Beverages: A standout in beverages, according to BofA. Domestic volumes seen up 12% year-on-year with stable margins and strong PAT growth. But the brokerage flagged rising competition and international mix as valuation concerns.

• Tata Consumer: Topline growth is healthy, but cost pressures are expected to weigh on March quarter margins. Ebitda likely to remain flat or decline.

• ITC: Stable cigarette volume and revenue trends (up 4–6% YoY), but overall profit could be flat. Cost inflation, limited pricing power, and drag from other FMCG and paper businesses remain concerns.

• Hindustan Unilever: BofA expects a soft fourth quarter. Flat volumes and just 1.5% pricing growth. Roughly 35% of the portfolio is under cyclical or company-specific pressure, it noted.

Selective on:

• DMart: Flagged caution. Despite 17% revenue growth, the brokerage sees earnings and valuation pressures due to high competition. Market will watch for management updates on store expansion and demand environment, it noted.

• Paints & Packaged Foods: Broad caution across these segments due to margin risks and weak demand trends. BofA expects flat to declining Ebitda for Britannia Industries Ltd., Nestlé India Ltd., and Tata Consumer Products Ltd.

While maintaining a bottom-up approach in a volatile environment, BofA reiterated its preference for companies with clearer growth visibility. “We remain cautious on paints, packaged foods and select names like D-Mart,” it said.