India’s consumer stocks are giving investors very different ways to play the country’s changing spending habits, and CLSA has picked three names it prefers. Eternal, DMart and Nykaa have ‘Outperform’ ratings, with the brokerage’s strongest conviction going to Eternal and DMart. Swiggy, despite its presence in food delivery and quick commerce, has a more cautious ‘Hold’ rating.
The interesting part of CLSA’s view is that the three preferred stocks are driven by very different businesses. Eternal gets a major boost from Blinkit’s quick-commerce expansion, DMart’s case rests on its low-cost retail model and private labels, while Nykaa is positioned around India’s beauty and personal-care market.
Eternal and DMart have both received High-Conviction ‘Outperform’ ratings from CLSA. Eternal has the highest potential upside in the group, while DMart also has a sizeable target-price gap.
The brokerage’s quick-commerce tracking adds another angle to the comparison. Blinkit is well ahead of Instamart and DMart Ready in weekly active users, giving Eternal an additional growth driver that CLSA is watching closely.
CLSA on Eternal: ‘Outperform’
Eternal is the strongest upside call among the consumer stocks covered by CLSA. The brokerage has a High-Conviction ‘Outperform’ rating and a target price of Rs 506, indicating an upside of 54.5%. Its case is closely tied to Blinkit’s growth, alongside the opportunity to improve performance in food delivery.
CLSA expects Blinkit to add more customers as it expands geographically and increases its dark-store network. The brokerage also sees higher ordering frequency and customer additions through Zomato Gold supporting the food-delivery business.
Blinkit’s user numbers provide support for the quick-commerce part of the story. CLSA said Blinkit added 0.9 million weekly active users in the latest week, taking its weekly active users to 57.4 million.
The brokerage also assigns a separate value to Blinkit in its valuation of Eternal. CLSA expects the quick-commerce business to remain an important source of growth as the network expands.
“An increase in customer adds for quick commerce with geographical expansion and widening dark store network.” CLSA said this is one of Eternal’s catalysts.
CLSA on DMart: ‘Outperform’
Avenue Supermarts Ltd. is the second High-Conviction ‘Outperform’ stock in CLSA’s consumer coverage. The brokerage has a target price of Rs 5,723, wsith the stock offering 46.4% potential upside.
The core of the DMart thesis is its retail model. CLSA says the company’s low operating costs allow it to offer lower consumer prices, which supports sales velocity and scale.
The brokerage also sees private labels as an important source of growth. DMart is expanding its private-label assortment, while continued store additions are expected to support its presence across more locations.
Quick commerce is the key competitive concern in the DMart story. CLSA lists increased competition from quick-commerce companies among the risks, even while maintaining its High-Conviction ‘Outperform’ view.
“DMart is rapidly scaling its private-label assortment, which in our view will drive the next level of share gains.” CLSA said.
CLSA on Nykaa: ‘Outperform’
FSN E-Commerce Ventures is the third consumer stock with an ‘Outperform’ rating from CLSA. The brokerage has a target price of Rs 376 and sees 13.3% potential upside.
CLSA’s view on Nykaa is linked to its position in India’s beauty and personal-care market. The brokerage describes the company as the clear market leader by GMV in online and offline beauty retail.
Customer additions are expected to support revenue growth, while operating leverage and higher average order values could help profitability, according to CLSA. The brokerage sees these factors supporting both the beauty and fashion businesses.
Competition remains part of the assessment. CLSA names Myntra, Shoppers Stop, DMart and Tira among the competitors, while also pointing to Nykaa’s consumer connection through its app and stores.
“We see Nykaa as one of the best-placed names to leverage this theme.” CLSA said.
Eternal and DMart get CLSA’s strongest conviction
Eternal and DMart stand apart from Nykaa because both have received High-Conviction ‘Outperform’ ratings. However, CLSA’s reasons for favouring the two companies are quite different.
For Eternal, Blinkit’s expansion is central to the growth case. CLSA expects customer additions to continue as the quick-commerce network expands into more locations.
For DMart, the brokerage is focused on the retailer’s cost structure and ability to maintain competitive prices. Private labels and new stores add to the growth opportunity.
This leaves CLSA with two High-Conviction consumer calls built around very different businesses. Eternal has the larger potential upside, while Avenue Supermarts offers a separate play on organised discount retail.
“DMart is a discount retailer with the lowest operating costs, which drives the lowest consumer prices.” CLSA said.
Quick-commerce: Blinkit pulls ahead of Instamart and DMart Ready
The quick-commerce data makes the Eternal, Swiggy and DMart comparison particularly interesting. CLSA’s latest tracking puts Blinkit well ahead of Instamart and DMart Ready in weekly active users.
Blinkit had 57.4 million weekly active users, compared with 11.9 million for Instamart and 1.6 million for DMart Ready. Blinkit also added 0.9 million users in the latest week, while Instamart added 0.2 million.
The gap has also been widening over the quarter. CLSA said Blinkit added 6.2 million weekly active users quarter-to-date, compared with 4.8 million added by all other quick-commerce players combined.
CLSA cautions that weekly active users do not always have a direct relationship with orders or transacting users. The brokerage also notes that Instamart is part of Swiggy’s Super app, which includes other services.
“Blinkit’s gap versus other players continues to rise gradually,” CLSA said.
Quick-commerce user snapshot
| Platform | Listed company | Weekly active users |
| Blinkit | Eternal | 57.4 million |
| Instamart | Swiggy | 11.9 million |
| DMart Ready | DMart | 1.6 million |
Source: CLSA, Sensor Tower.
CLSA on Swiggy: ‘Hold’
Swiggy is outside CLSA’s three ‘Outperform’ consumer picks. The brokerage has a ‘Hold’ rating and a target price of Rs 312, with 8.7% potential upside.
CLSA still sees meaningful growth potential for Swiggy across food delivery and quick commerce. For Instamart, customer additions through geographical expansion and a wider dark-store network are among the potential catalysts.
Instamart had 11.9 million weekly active users in CLSA’s latest tracking, after adding 0.2 million users during the week. The brokerage also describes Swiggy as an early leader in quick commerce with a recognised brand among young Indian consumers.
At the same time, CLSA lists rising competition, faster growth of Toing and under-utilisation of additional dark stores among the risks. These factors form part of the brokerage’s more cautious view on Swiggy.
“We believe Swiggy has large headroom for growth in both categories,” CLSA said.
CLSA’s consumer sector outlook
CLSA’s three ‘Outperform’ stocks cover very different parts of consumer spending. Eternal combines food delivery and quick commerce, DMart is focused on discount retail and private labels, while Nykaa is built around beauty, personal care and fashion.
The strongest conviction is reserved for Eternal and DMart. Eternal’s Blinkit business is gaining users rapidly, while DMart continues to benefit from its low-cost retail structure and expanding private-label range.
Nykaa’s case is separate from the quick-commerce theme. CLSA sees its beauty and personal-care position, customer additions and potential profitability gains as key factors supporting the ‘Outperform’ rating.
Swiggy has been rated ‘Hold’, even though CLSA sees room for growth in its two main businesses.
Conclusion
CLSA’s consumer stock picks put Eternal, DMart and Nykaa in the ‘Outperform’ group. Eternal offers the biggest potential upside, with Blinkit’s user growth and expansion plans supporting the case. DMart’s appeal comes from its low-cost retail model, private labels and store additions, while Nykaa gets support from its position in beauty and personal care. Swiggy remains a ‘Hold’, despite CLSA seeing growth opportunities.
Consumer stock ratings and upside
| Stock | CLSA rating | Target price | Potential upside |
| Swiggy | ‘Hold’ | Rs 312 | 8.7% |
| Nykaa | ‘Outperform’ | Rs 376 | 13.3% |
| DMart | High-Conviction ‘Outperform’ | Rs 5,723 | 46.4% |
| Eternal | High-Conviction ‘Outperform’ | Rs 506 | 53.5% |
Source: CLSA.
Disclaimer: This article is based on the CLSA consumer research report. The ratings, target prices, estimates and views mentioned are those of CLSA and are provided for informational purposes only. This article should not be treated as investment advice. Investors should make their own assessment and consider their financial circumstances before making any investment decision. Investments are subject to market risks, and returns are not guaranteed.