Aggregate revenue for the sector rose 8% in 2QFY26, while EBITDA growth remained modest at 4%, reflecting temporary disruptions in staples and margin pressures from high-cost inventories across categories.
Staples experienced muted growth as the GST transition and an extended monsoon weighed disproportionately on personal care segments. While demand remained steady in packaged foods, 2–3% of sales for most companies were affected by trade transitions.
However, stability is expected from November as volatility subsides and price/grammage adjustments reach consumers. Rural markets continued to outpace urban areas for the seventh consecutive quarter, supported by resilient essentials demand.
Paints, by contrast, began showing signs of revival from late September, aided by festive repainting, improving rural sentiment, and normalising trade inventory.
Liquor maintained strong momentum, driven by premium spirits and benign input costs, even as beer volumes remained soft owing to weather-related disruptions.Jewellery extended its outperformance, delivering 26% revenue growth despite high gold prices and a heavy monsoon. Innerwear, though subdued through July–August, witnessed a late-quarter recovery on the back of improving sentiment and early festive buying.Premiumisation emerged as a consistent growth driver in liquor, jewellery, and select staples categories. The rise of alternative channels—particularly e-commerce and quick commerce—continued to accelerate FMCG penetration, contributing meaningfully to omnichannel growth. However, competitive intensity remained elevated in paints due to aggressive promotions by new entrants, pressuring value growth and margins.
Margin performance was mixed across the sector. High-cost inventories continued to affect staples’ gross margins, while paints benefited from benign raw material prices. Beer suffered negative operating leverage, and QSR players saw margin pressure due to muted dine-in trends. Jewellery stood out with margin expansion supported by a better studded mix.
The medium-term outlook for the sector remains constructive. A favourable winter season is set to boost personal care, beverages, and health supplements. Rural sentiment—supported by government measures and stable incomes—should further fuel staples and discretionary categories.
Festive and wedding-driven demand is expected to sustain momentum in jewellery and liquor, while paints could see a strong second-half recovery as weather normalises. Innerwear and QSR players anticipate improved throughput as consumption gradually strengthens.
Overall, the consumer sector is positioned for a steady recovery, underpinned by structural premiumisation trends, channel diversification, and easing input cost pressures.
Titan Company: Target Rs 4500
Titan Company (TTAN) continues to demonstrate robust momentum across its jewellery, watches, and emerging businesses, driven by strong brand recall and omni-channel initiatives. In 2QFY26, consolidated revenue grew 29% YoY to INR187.3b, with standalone jewellery (ex-bullion) up 19% YoY and CaratLane contributing 29% YoY growth.
Standalone jewellery EBIT margin contracted 60bp to 10.8% due to a higher gold coin mix and promotional investments, while CaratLane’s margin expanded 320bp to 10.2%.
Watches and eyewear delivered 13% and 9% revenue growth, respectively. Management highlighted strong festive season demand, stabilisation of gold prices, and continued expansion in lower carat and 18K jewellery segments.
With 35-40 new stores planned in FY26 and a focus on revamping existing stores, Titan is positioned for sustainable long-term growth. We estimate Revenue/EBITDA/PAT FY25-28E CAGR: 18%/20%/23%. Reiterate BUY, supported by superior execution, structural growth in branded jewellery, and resilient margins.
Hindustan Unilever: Target Rs 3050
Hindustan Unilever reported a steady 2QFY26, with consolidated revenue up 2% YoY to INR162.5b and flat underlying volume growth, in line with expectations. EBITDA declined 1% YoY to INR37.4b, with margins contracting 80bp YoY to 23%, while PAT stood at INR25b, down 4% YoY.
Performance was affected by the GST transition and prolonged monsoon, but management expects a stronger recovery in 2HFY26 as rural demand and consumption improve.
Home Care and Beauty & Wellbeing segments showed healthy trends, supported by innovation and brand investments.
We estimate revenue, EBITDA, and PAT CAGR of 8%/8%/9% over FY25–28, driven by volume-led growth, portfolio premiumization, and easing input costs. Management remains optimistic about margin improvement post demerger.
(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
