Consumer stocks will be in focus as Kotak Institutional Equities expects a resilient June-quarter for staples while forecasting mixed trends across discretionary segments.
In its Q1FY27 preview, the brokerage on Monday said, "We expect: (1) Staples-resilient growth and negligible margin pressure in 1Q... on account of low-cost inventory and timely price hikes; and (2) discretionary-strong demand in jewelry/PIDI... and weak volumes in UNSP and cigarettes."
Kotak added, "We expect TTAN, PIDI, MRCO, NEST, HONASA and BLUESTON to report a good quarter," while "JUBI, UNSP, JYL and ITC" are likely to post weaker earnings.
Among staples, the brokerage expects Honasa Consumer to report 22% organic revenue growth, Marico 20%, Nestlé India 19.3%, Godrej Consumer Products 12.5%, Tata Consumer Products 11.5%, Colgate-Palmolive India 10.5%, Hindustan Unilever and Dabur around 10% each, and Britannia Industries 9.5%.
Kotak said, "EBITDA margin trends are likely to be mixed," but expects "no major yoy impact on EBITDA margins for most names" due to price hikes, low-cost inventory and moderated advertising spends.
In discretionary, Kotak expects decorative paints and adhesives to remain strong. Pidilite Industries is projected to post 18% revenue growth, while it expects "another strong quarter from TTAN" with 39% year-on-year growth in domestic Tanishq jewellery sales and 31% growth in jewellery EBIT.
Among beverages, Varun Beverages is expected to deliver around 22% growth in volume, revenue and EBITDA. For ITC, however, Kotak forecasts cigarette volumes to decline 9% year-on-year, with net revenue and EBIT falling 22% and 32%, respectively, following recent taxation-led price hikes.