United Spirits, United Breweries, Marico Are Nuvama's Top Consumer Picks This Summer — Here's Why
Despite a slowdown in urban areas, Nuvama spots a trend of consumers choosing premium products in beer, spirits, and personal care.
United Spirits Ltd., United Breweries Ltd., Pidilite Industries Ltd., and Marico Ltd. are among Nuvama's preferred stocks. The brokerage also has a positive view on Nestle India Ltd., Berger Paints India Ltd., and Emami Ltd.
It estimates these companies will achieve a revenue growth of 9% year-over-year and a volume growth of 4% year-over-year in the fourth quarter of FY25. Ebitda is expected to grow by 3% year-over-year.
Impact Of Summer
With the upcoming summer season predicted to be a scorching one, sales of cola, beverages, talcum powder, and ice creams will go up, according to Nuvama. Varun Beverages Ltd. and Emami are also set to see a positive boost.
Liquor companies are expected to show good performance too. This expectation is supported by a shift towards premium products, favourable policies in Andhra Pradesh, and the wedding season.
Despite a slowdown in urban areas, the brokerage also spotted a trend of consumers choosing premium products in beer, spirits, and personal care that is continuing overall. ITC is likely to report a 4% year-over-year increase in cigarette sales volume, according to the brokerage.
The paints sector is showing a slight recovery, but Asian Paints may still face challenges due to the urban slowdown. The brokerage's pick is Berger Paints over Asian Paints. Colgate-Palmolive is also expected to have a weak quarter, according to Nuvama.
Margin Pressure And Volume Improvements
Margins for soaps, snacks, tea, and coconut oil are expected to be under pressure. This is due to the increase in the prices of palm oil, copra, and tea, according to the brokerage.
This will likely negatively affect the year-over-year margins of Tata Consumer Products Ltd., Godrej Consumer Products Ltd., Bikaji Foods International Ltd., and Marico, said Nuvama.
Despite this, Bikaji Foods, Godrej Consumer Products, Tata Consumer’s NourishCo, and Nestle are set to see an improvement in sales volumes, compared to previous years.
Rural Recovery And Urban Challenges
Rural demand is showing a gradual recovery, Nuvama notes. The monsoon season this year is expected to be strong, and this could further aid rural demand.
The slowdown in urban areas, affecting both traditional grocery stores and modern trade, is expected to continue in the first half of FY26. This is attributed to low wage growth, higher rental costs, and high interest expenses on loans, according to the brokerage.
