FMCG Sector
HDFC Securities Favours Six FMCG Stocks Ahead of Q2FY27 Results
HDFC Securities has outlined its preferences for the upcoming Q2FY27 earnings season in the FMCG sector, maintaining an underweight stance on the industry overall due to weak earnings visibility and eroding competitive moats. Despite this cautious outlook, the brokerage expects revenue growth to improve in the September quarter, driven by a softer base effect and selective price hikes that partially offset inflationary pressures.
The firm forecasts around 12% year-on-year revenue growth across its FMCG coverage, with most companies likely to report double-digit topline expansion. However, it warns that this improvement may not translate into proportional earnings gains, as persistent raw-material inflation continues to pressure margins. ITC, Bikaji Foods, and Gopal Snacks are expected to see year-on-year earnings declines, while HUL, Dabur, and Emami may deliver only single-digit earnings growth.
In contrast, Nestlé India, Marico, Colgate-Palmolive, and Honasa Consumer are anticipated to show stronger earnings momentum, supported by margin expansion. Against this backdrop, HDFC Securities has identified six stocks with stronger execution capabilities as its preferred picks: Nestlé India, Godrej Consumer Products, Britannia Industries, Honasa Consumer, Emami, and Bikaji Foods.
The brokerage has upgraded Nestlé India to a BUY rating, citing a more reasonable valuation following sector-wide de-rating. It assigns a target price of ₹1,555, implying 19% upside from the current market price of ₹1,308, and expects Q2FY27 revenue to grow 21%, EBITDA by 30%, and adjusted PAT by 37%.
Britannia Industries carries a target of ₹6,000 (26% upside), with revenue expected to rise 12%, EBITDA 6%, and adjusted PAT 10%. Godrej Consumer Products has a target price of ₹1,000 (19% upside), with projected growth of 18% in revenue, 14% in EBITDA, and 10% in adjusted PAT.
Emami is valued at ₹500 (34% upside), with revenue growth seen at 20%, though EBITDA and adjusted PAT are forecast to rise only 7% and 4%, respectively. Bikaji Foods has the highest upside potential among the preferred names at ₹700 (39% upside), but adjusted PAT is expected to decline by 15% in Q2FY27.
Honasa Consumer rounds out the list with a target of ₹550 (28% upside), and robust growth expectations: revenue up 28%, EBITDA up 72%, and adjusted PAT up 68%. HDFC Securities stresses that the festive quarter commentary will be critical in shaping the earnings trajectory, as any demand moderation amid sustained inflation could further pressure results.
The brokerage maintains that while topline growth is set to improve, margins and earnings delivery will remain the key differentiators for investor confidence in the FMCG sector during Q2FY27.
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