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UBS anticipates a rebound in India's consumer sector by FY26, forecasting 13% earnings growth following a challenging FY25. Key stocks include Hindustan Unilever, Trent, and DMart, with upgrades in ratings and price targets, while Asian Paints and Dabur face downgrades due to disruption and portfolio issues. The report highlights a potential income stimulus from tax cuts and the Eighth Pay Commission, which could enhance consumption and support earnings growth.
Goldman Sachs identifies ten Indian stocks, including HDFC Bank, Adani Ports, and Power Grid, with potential returns of up to 45% over the next year, despite a recent 10% market correction. The firm emphasizes that the current economic slowdown is cyclical, with expectations of a GDP growth rebound in late 2025 due to recent policy easing measures. Key stock picks are supported by strong earnings growth forecasts and favorable valuations, positioning them well for future performance.
Goldman Sachs identifies HDFC Bank, Power Grid, and Godrej Consumer among its top picks amid a cyclical slowdown in the Indian economy, driven by policy tightness. While recent measures like tax relief and RBI rate cuts may boost GDP growth to 6.4% in late 2025, risks from potential US tariffs and market volatility remain.
Jefferies and JPMorgan remain optimistic about Godrej Consumer Products Limited (GCPL) despite a margin squeeze in Q3FY25, attributing the challenges to temporary factors rather than structural issues. The company anticipates flat volume growth in the December quarter, with management projecting mid-single-digit sales growth despite subdued demand conditions. CLSA has lowered its target price for GCPL to Rs 1,000, citing concerns over margin pressures, particularly in the soaps and home insecticide segments, which significantly impact domestic revenue.
Godrej Consumer Products Limited anticipates mid-single digit sales growth due to subdued demand in the FMCG market, which has persisted for several months. Despite challenges like delayed winters and cyclones affecting the Home Insecticides segment, the company has maintained an average organic volume growth of approximately 7% over the past six quarters, with other portfolio segments expected to achieve double-digit growth.
Kirana stores, once central to India's retail landscape, are struggling with profitability due to the rise of e-commerce and changing consumer habits. FMCG giants like Dabur and Hindustan Unilever are responding by streamlining inventories to support their traditional distributors, despite a temporary dip in sales. Dabur's CEO emphasized that this strategic move is essential for the long-term health of their business and the profitability of their general trade partners.
Godrej Consumer Products Ltd (GCPL) reported strong underlying volume growth in Q2, driven by domestic home care expansion and rural distribution. While inflation in palm oil impacted personal care margins, the company saw positive performance in Indonesia and an expanding margin in its African cluster, maintaining a long-term growth outlook despite challenges.
IndusInd Bank, Dixon Tech, and Godrej Consumer were among the top gainers and losers in trading on October 25, as the Sensex and Nifty closed lower due to heavy foreign institutional selling and disappointing Q2 earnings. IndusInd Bank's shares fell over 18% after reporting a 40% year-on-year drop in net profit to ₹1,331 crore, attributed to a significant increase in loan loss provisions. All but the Nifty FMCG sector saw declines, reflecting a challenging market environment.
Godrej Consumer Products Limited (GCPL) reported a 2% year-on-year revenue increase in Q2FY2025, driven by a 7% volume growth in India, outperforming many FMCG peers. The company's operating margin improved to 20.8%, and adjusted PAT rose by 12%. Despite a 19% stock correction, a target price of Rs 1,545 is maintained, with expectations of double-digit revenue growth in H2, particularly in soaps and liquid detergents.
The Sensex and Nifty fell by 1% amid persistent FII outflows and disappointing earnings, marking the fifth consecutive session of declines. The broader market suffered significantly, with the BSE Midcap and Smallcap indices down 2% and nearly 3%, respectively, while India VIX rose over 7%. IndusInd Bank's shares plummeted nearly 20% following poor quarterly results, contrasting with Godrej Consumer Products, which saw a 2% rise after positive brokerage calls.
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