The FMCG sector is in focus as the full impact of the GST rate rationalisation is likely to be seen in the forthcoming quarters. Axis Securities has picked the top three high conviction stocks in the FMCG sector to bet on with an upside of as much as 24%.
Here is a detailed analysis of the investment rationale driving these stocks-
Axis Securities on Nestle India
The brokerage house maintained its ‘Buy’ rating on the stock, with a target price of Rs 1,410, which is an upside of 10%. Nestlé India remains well-positioned for long-term growth, underpinned by its dominant domestic franchise, continued innovation, distribution-led market penetration, capacity expansion, and increasing out-of-home consumption.
However, the brokerage expects that volatile commodity prices, especially in coffee, cocoa, and edible oils, may keep near-term margins under pressure; the expected moderation in milk prices alongside its strong pricing power and efficiency initiatives should partly offset cost headwinds.
Axis Securities on Britannia Industries
The brokerage house maintained its ‘Buy’ rating on Britannia Industries, with a target price of Rs 6,750. The price target is an upside of 16% from the current market price. Most FMCG players like Britannia are seeing early demand recovery across urban and rural markets, supported by stable input costs and improving margins. Further, the cut in GST rates on key food items is likely to raise affordability, lift consumer sentiment, and drive stronger traction in daily-use and low-unit-price SKUs.
Going ahead, with the festive season ahead, demand is expected to accelerate, positioning branded FMCG and discretionary categories for healthier volume growth in the near term.
Axis Securities on DOMS Industries
The brokerage house, with a ‘Buy’ rating, has a target price of Rs 3,110 on DOMS Industries, implying an upside of 23.5%. The company has been executing strategic initiatives over the past few years, which are expected to drive growth in the coming years. Plus, the new 44-acre greenfield facility will further accelerate growth. Additionally, DOMS Industries is entering fast-growing segments such as bags, toys, and diapers, which will provide an incremental growth boost.
Also, the company has strategically partnered up with FILA, which enables DOMS to expand its global footprint while leveraging FILA’s R&D capabilities, offering the company a long-term competitive edge.
