Consumer product companies are businesses that produce goods intended for personal use by individuals or households. These companies manufacture and sell a wide range of products that cater to everyday needs and preferences, such as food, beverages, personal care items, household essentials, electronics, and more.
Motilal Oswal Securities Limited remains optimistic about the growth and value potential within the consumer staples sector. Despite encountering challenges in sustaining volume growth over the last two years due to external factors like economic conditions and regulatory changes,.
In its research note, the brokerage anticipates that the volume growth for staple companies will stabilize, hitting a low point, and indicating signs of enhancement, particularly from FY25 to FY26.
Motilal Oswal Securities Limited has recommended a buy call on consumer products stocks, anticipating a potential upside of 28 percent.
Dabur India Ltd is India’s fourth largest FMCG company, and caters to the health care, personal care & food segment. The company’s product range includes health care products they have brands like Hajmola, Pudin Hara, Dabur Chyawanprash, Glucose D, Dabur Lal tail, etc.
Dabur India Ltd belongs to a large-cap category of stock with a market capitalization of ₹93,954 crores. On Wednesday, company shares were trading at ₹530 per share, down 0.26 percent on the stock exchange.
Motilal Oswal Securities gave a buy recommendation on Dabur India Ltd for a target price of ₹65 per share, representing a 23 percent upside from the current market price.
Dabur’s expansion into various sectors such as baby care, tea, healthcare, and beverages, coupled with its transition from focusing solely on power brands to embracing power platform strategies, has not only widened its total addressable market (TAM) but also fortified its market presence.
To cater to contemporary consumers, particularly the new-age and millennial demographics, Dabur has revamped its packaging across diverse product categories
and introduced additional product formats. Furthermore, Dabur has placed significant emphasis on enhancing its Ayurvedic portfolio and extending its distribution network to approximately 0.12 million villages and around 7.9 million outlets.
Analysts predict that Dabur’s revenue growth will continue to surpass expectations in the foreseeable future. Moreover, there is room for improvement in the operating margin, which has remained relatively stable at approximately 20% for the past 8-9 years. Despite a recent period of underperformance, the stock is currently trading at a 15-20% discount to its historical three/five-year averages, with an estimated FY26E EPS of 40x.
Hindustan Unilever is in the FMCG business, comprising primarily of Home Care, Beauty & Personal Care, and Foods & Refreshment segments. The Company has manufacturing facilities across the country and sells primarily in India.
Hindustan Unilever Ltd. belongs to a large-cap category of stock with a market capitalization of ₹5,33,992 crores. On Wednesday, company shares were trading at ₹2,273 per share, down 0.61 percent on the stock exchange.
Motilal Oswal Securities gave a buy recommendation on Hindustan Unilever Ltd for a target price of ₹2,900 per share, representing a 28 percent upside from the current market price.
Hindustan Unilever (HUL) has recently experienced underperformance primarily due to external factors. However, it has consistently increased market share across the majority (85%) of its portfolio.
Analysts view the competitive pressure from local players as temporary. According to brokerage reports, HUL has heavily reinvested in expanding and upgrading its consumer base within various categories.
Analysts anticipate that once macroeconomic conditions become favorable, HUL’s extensive network of users will facilitate growth. The company allocates over Rs 60 billion towards marketing to maintain competitiveness and brand recall. Analysts expect that this investment will yield better results in a stable macro environment.
Over the past decade, HUL’s competitiveness in the home care segment has significantly improved, leading to substantial enhancements in EBIT margin ranging from 900 to 1,000 basis points.
Under the leadership of Mr. Rohit Jawa, the brokerage foresees further corrective actions to address any gaps in the company’s strategies. With expectations of gradual macroeconomic improvements, analysts predict that HUL will seize opportunities and achieve enhanced volume growth in the fiscal years 2025-2026.
Godrej Consumer Products is a fast-moving consumer goods company that manufactures and markets household and personal care products.
Godrej Consumer Products Ltd belongs to a large-cap category of stock with a market capitalization of ₹1,21,982 crores. On Wednesday, company shares were trading at ₹1,193 per share, down 1.4 percent on the stock exchange.
Motilal Oswal Securities gave a buy recommendation on Godrej Consumer Products Ltd for a target price of ₹1,500 per share, representing a 26 percent upside from the current market price.
According to brokerage analysis, the internal initiatives of Godrej Consumer Products Ltd. (GCPL) are anticipated to sustain the company’s growth outperformance. The expansion of GCPL’s target market through the inclusion of incense sticks and entry into liquid detergent, along with highlighting its backend competence and growth-oriented approach, is expected.
The company has embraced a growth-centric strategy, encompassing inorganic growth pursuits, cross-selling, entry into new categories, and the expansion of the Total Addressable Market (TAM) for existing products.
Furthermore, there has been an uptick in reinvestment, particularly in marketing expenditures. The company has made strategic decisions such as enhancing inventory management for Raymond Consumer Care (RCCL) and its Indonesia business, as well as divesting from non-core businesses.
Indonesia and Godrej Africa, US, and the Middle East (GAUM) still present significant potential for the company’s EBITDA margin expansion in the forthcoming years.
Written by Omkar Chitnis
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
