Indian FMCG stocks could see an improvement in earnings growth over the next two financial years, according to Anand Rathi Research, which has identified Marico, Godrej Consumer Products (GCPL), Mrs Bector Food and Asian Paints as its preferred picks across the staples and discretionary segments.
The brokerage expects its coverage universe of 16 companies to deliver around 10% revenue compound annual growth rate (CAGR) and 15% earnings CAGR over FY26-28, signalling an improvement from the subdued growth recorded in FY25 and FY26.
“We expect our coverage universe, consisting of 16 companies, to clock ~10% revenue CAGR over FY26-28e driving ~15% earnings CAGR (vs. 4/7% YoY revenue growth and -3/5% earnings growth in FY25/26),” Anand Rathi Research said in its report.
Why Anand Rathi prefers Marico, GCPL, Mrs Bector Food and Asian Paints
The brokerage’s preferred picks cover consumer staples and discretionary businesses. Its recommendations come amid mixed trends in the sector, with several stocks facing pressure even as the brokerage anticipates stronger earnings growth over FY26-28.
Marico | Target: ₹990 | Upside: 29.5%
The brokerage projected earnings per share (EPS) of ₹17.3 for FY27 and ₹19.8 for FY28. Its estimated price-to-earnings (P/E) multiple stood at 44.6 times FY27 earnings and 38.9 times FY28 earnings.
Godrej Consumer | Target: ₹1,400 | Upside: 64%
Anand Rathi estimated EPS of ₹24.3 for FY27 and ₹28.9 for FY28, with its forward P/E multiple expected to decline from 35.3 times to 29.7 times.
Asian Paints | Target: ₹3,180 | Upside: 38%
Its EPS was projected at ₹55.6 for FY27 and ₹63.6 for FY28. The corresponding estimated P/E multiples were 41.8 times and 36.5 times.
Mrs Bector Food | Target: ₹250 | Upside: 32%
The brokerage forecast EPS of ₹5.8 for FY27 and ₹7.1 for FY28, with the P/E multiple expected to ease from 35 times to 28.5 times.
Key Challenges
The brokerage highlighted cost pressures across the FMCG sector. Sugar prices rose 16% over one month, while wheat prices increased 22.4% over six months. Copra prices gained 13% over three months, and crude oil prices rose 10.8% over one month and 22.1% over three months. These movements could weigh on input costs for consumer goods companies.
Regulatory scrutiny was another concern. The Food Safety and Standards Authority of India issued notices to Nestlé India and Hindustan Unilever over alleged misleading product claims and regulatory non-compliance, including matters relating to Horlicks and certain nutritional products.
Anand Rathi said the revenue contribution of the affected product variants was expected to be minimal and unlikely to materially affect earnings. However, it anticipated higher compliance and communication costs across the food and FMCG industry, particularly among companies focused on health and nutrition.
“We believe the revenue contribution of Horlicks Mother’s Plus Kesar and Resource Renal vanilla variants to HUL and Nestle will be very minimal and unlikely to have a material impact on their earnings,” Anand Rathi Research said.
What are Anand Rathi’s earnings estimates for FY27 and FY28?
Anand Rathi’s estimates point to higher EPS across all four preferred stocks in FY28 compared with FY27. The brokerage expects this improvement to support a decline in their forward valuation multiples over the period, based on the market prices used in its report.
For Marico, EPS is projected to rise from ₹17.3 in FY27 to ₹19.8 in FY28. GCPL’s EPS is expected to increase from ₹24.3 to ₹28.9, while Asian Paints’ EPS is forecast to climb from ₹55.6 to ₹63.6. Mrs Bector Food’s EPS is estimated to rise from ₹5.8 to ₹7.1.
The estimates suggest that the brokerage expects earnings to strengthen across its preferred stocks, although actual performance will depend on business conditions, demand trends and cost movements.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
