Consumer Sector Check - Recap, Review, Restore: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.After the election outcome, the rally in consumer stocks has extended further for the last two days, which is mainly attributed to portfolio allocation. We believe this rally in staple stocks is driven by not only its ‘defensive sector’ tag but also the underlying excitement, which was triggered by strong post-Q4 management commentary. Most investors were in sync with us on the risk-reward proposition (noted during our extensive road show on consumer thematic); however, they wanted to see more signs of recovery before buying into the sector. In the last two days, the risk-reward proposition along with sector tailwinds, has quickly gained the required attention..How do we want to play? In our initial argument of favorable risk-reward for staple companies, certainly the reward has come quite quickly. But the question arises: has the risk increased due to this stock rally? We believe that as earnings catalysts are in place and stocks are also within our fundamental value, the risk factor is still under control. However, volume performance will be critical to maintaining the stocks’ performance. The sector has seen several headwinds in FY23/FY24, we believe the earnings cycle will see an upward trend. An abovenormal monsoon, rural pickup, distribution expansion, seasonal benefits (summer/winter portfolio has favorable base) and steady raw material prices provide visibility on the earnings acceleration in FY25..Top picks: We maintain our over-weight call on the staple sector and continue to prefer HUL, Godrej Consumer Products and Dabur as our top picks..Click on the attachment to read the full report:.Modi 3.0 – The Coalition Avtaar: Dolat Capital.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Consumer Sector Check - Recap, Review, Restore: Motilal Oswal

Expect recovery in volume growth

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