The consumer sector stocks are in focus as the markets get set for the Q3 results season. Nuvama Institutional Equities pointed out that the consumer sector is set to showcase the impact of a demand recovery in November and December after GST-rate cut disrupted trade in October. They believe that Marico, CCL Products India, Bajaj Consumer Care, Tata Consumer Products, Bikaji Foods (ex-PLI), Nestle India, and Pidilite are likely to lead top-line growth in Q3 FY26.
This rebound is driven by normalised inventory levels, companies passing on GST benefits to consumers through increased product grammage, and a harsh winter (La Niña effect) that has bolstered skincare and healthcare sales while dampening beer consumption.
Nuvama’s top picks in the consumer sector
Identifying the changing dynamics in the consumer sector, Nuvama listed its top ‘Buy’ in the sector. The brokerage house is betting on “Nestle, Tata Consumer, Britannia, Asian Paints. We also like Godrej Consumer as H2 base is favourable and Marico due to easing copra costs.”
In terms of volume growth, Nuvama believes that “Tata Consumer leads, followed by Nestle, Godrej Consumer, Marico, Emami and Bikaji, each to grow at 8%. Colgate shall be a laggard with 3% decline in toothpaste volumes.”
Listing out the winners in each segment under the consumer sector umbrella, Nuvama expects Pidilite to lead the paints and adhesives pack with 9% volume growth, followed by Asian Paints at 8%. Berger is likely to post 6% volume growth. Birla Opus’ revenue is likely to grow 15% QoQ, Nuvama added.
They expect benign tea prices to support “Tata Consumer and HUL margins from Q4FY26. Coffee remains stable.” According to them, Malaysia’s crude palm oil production is “likely to be good; positive for food companies such as Nestle, Britannia, Bikaji and soap players such as HUL, Godrej Consumer.”
Nuvama on consumer sector: Normalising operations, GST benefits
Many firms passed GST benefits to customers by increasing product grammage. For example, 85% of Britannia’s portfolio moved from an 18% GST rate to just 5%. The full benefits of these GST rate cuts are expected to be visible through the early months of 2026. According to Nuvama, as GST benefits are increasingly passed on to consumers, companies anticipate a strong rebound in sales, with the positive impact of GST cuts likely to reflect in volumes going forward. The improvement in volumes was driven by higher sales of products across categories such as soaps, detergents, snacks and noodles.
Nuvama on consumer sector: Seasonal and economic factors
A harsh winter, driven by the La Niña effect, also impacted sales across different categories. It serves as a positive driver for Emami’s skincare and Hindustan Unilever’s personal care brands. Conversely, it acts as a drag on beer consumption for United Breweries. Adding to that, currency fluctuations pose a threat to margins. The Rupee has hit historical lows, crossing the 90 mark against the Dollar. Nuvama highlighted that this raises the risk of cost inflation for imported inputs like chemicals and edible oils.
Nuvama on consumer sector: Rural strength
Rural demand has now outpaced urban demand for seven consecutive quarters. In November, rural growth was 5.7%, while urban growth lagged at 2.5%. Despite this, Indian consumers are the most optimistic globally for 2026. About 60% of households plan to increase their spending over the next six months.
Despite these pressures, India has emerged as the most optimistic consumer market globally for 2026, with top-tier players such as Nestle, Tata Consumer, and Emami expected to lead in volume and revenue growth.
Meanwhile, Colgate, Berger Paints, and United Breweries are likely to be laggards.
All in all, the Indian consumer market is like a sturdy ship that has navigated through a brief storm of policy changes and is now catching a strong tailwind of optimism to reach new shores. Also, the rural demand continued to outperform urban, and the sector faces potential risks from Indian rupee depreciation.