FMCG stocks may be slowly coming out of a prolonged dull phase, and CLSA is turning selective within the space. The brokerage is betting on food and beverage companies, with Nestle India, Tata Consumer and Varun Beverages emerging as its top picks after a strong March quarter performance.
According to Aditya Soman, Senior Research Analyst at CLSA India Nestle’squarter four numbers stood out, delivering a clear beat led by healthy demand across key categories. Growth was driven largely by beverages and confectionery, particularly coffee, where demand remained strong.
The company has also gained from its deeper push into modern trade channels like quick commerce and e-commerce, helping premium products scale up faster.
CLSA believes this trend is not limited to Nestle alone. The brokerage expects food-focused companies to continue outperforming the broader FMCG pack in the near term.
Soman added, “Generally, we have a preference for the food businesses or the home and personal care businesses. Going into this quarter, we expect the food companies to continue outperform.”
Apart from Nestle and Tata Consumer and Varun Beverages are also on CLSA’s radar, especially with an extended summer expected to support demand.
However, the broader FMCG recovery remains uneven. While food and beverage companies are gaining traction, home and personal care players continue to face challenges.
Pricing power may not fully translate into margin gains, especially in categories like paints, where competition is increasing and volume growth remains uncertain.
Soman remains positive on Eternal and DMart, calling it one of CLSA’s high-conviction ideas despite near-term volatility.
He said, “We feel Eternal has maintained that stance of charging consumers, of maintaining a higher price and really focusing on the convenience aspect of quick commerce, which ultimately I feel is the right way to go.”
For full interview, watch accompanying video
