Nomura Recommends 17 Consumer Stocks Including Titan and Lenskart

As the second quarter earnings season approaches, Nomura, the international brokerage, has released its list of 17 consumer stocks that it recommends investors buy. The firm expects demand to remain fairly steady despite the full impact of recent price increases. However, it also warns that margins may face pressure due to higher-priced inventory.

Nomura anticipates volume growth to hold steady on a sequential basis, while pricing growth is projected to accelerate. The brokerage expects the average earnings before interest, taxes, depreciation, and amortization (EBITDA) growth for its covered companies to moderate to 13.8 percent year-on-year, which still significantly exceeds the eight-quarter average growth rate of 7 percent.

Among the top picks, Hindustan Unilever (HUL) stands out with a target price of Rs 2,450, suggesting a 31 percent upside from current levels. Nomura expects HUL’s volume growth to remain consistent with the first quarter’s 5 percent, despite a weaker base in the second quarter of the previous year.

Similarly, Nestle India has earned a 'Buy' rating with a target price set at Rs 1,675, implying a 25 percent potential increase. The brokerage forecasts that Nestle India will sustain its robust growth momentum, supported by a 17 percent year-on-year increase in volume and mix growth, translating into overall sales growth of 23 percent. This growth is expected to continue until the company begins cycling a high base starting in the third quarter.

Tata Consumer Products also features prominently in Nomura’s list with a target price of Rs 1,475, implying an upside of 53 percent. The brokerage anticipates a marginal sequential revenue growth improvement to 12.5 percent year-on-year. This growth is expected to be driven by small price hikes and continued expansion in the company’s growth businesses. On a constant currency basis, sales growth is expected to be flat, with a reported 5 percent year-on-year increase attributed primarily to foreign exchange gains. Non-branded sales are expected to grow by 10 percent year-on-year despite a high comparative base.

Marico has been given a 'Buy' rating with a target price of Rs 1,000, indicating a 26 percent upside. Nomura expects the company’s recent price reductions to support volume growth in its flagship Parachute brand, resulting in an overall volume increase of 8.5 percent year-on-year. The brokerage also projects continued strong growth in Marico’s newer business acquisitions.

Allied Blenders receives a positive outlook with a target price of Rs 850, suggesting a 19 percent upside. The brokerage expects sequential improvements in the company’s premium and above (P&A) volume growth to 13.5 percent year-on-year, primarily driven by the Karnataka market. The mass premium segment is also expected to see volume growth of 7.7 percent, supported by its non-whisky portfolio, contributing to overall volume and sales growth of 10.4 percent.

Lenskart Solutions is another notable pick with a target price of Rs 888, implying a 32 percent upside opportunity. Nomura forecasts that Lenskart will maintain its strong volume growth in India at 23 percent year-on-year, consistent with the first quarter. Additionally, the international business is expected to grow by 25 percent year-on-year, driving overall volume growth of 23.5 percent for the company.

Titan is also on Nomura’s list with a 'Buy' rating and a target price of Rs 5,425. While specific growth details were not provided, Titan’s inclusion reflects confidence in its consumer business performance.

Other consumer stocks that Nomura has recommended for buying include Dabur, Colgate India, EPL, Asian Paints, Berger Paints, Kansai Nerolac, Britannia Industries, Godrej Consumer, and United Spirits. These companies represent a broad spectrum of the consumer goods sector, covering categories from personal care and beverages to paints and packaged foods.

Nomura’s recommendations come at a time when the consumer sector is navigating the challenges of inflationary pressures and shifting consumer preferences. The brokerage’s outlook suggests that while pricing adjustments may impact margins, volume growth is expected to remain resilient across many companies.

Investors considering these stock picks should review the original research reports and assess their individual investment goals and risk tolerance before making decisions. The views presented by Nomura are based on detailed analysis but are subject to market conditions and company-specific developments.