FMCG Stocks: International brokerage firm Nomura says that the valuation of the consumption sector is good at this time. Also, growth prospects are also strong. In its recent report, it has advised to buy shares of Hindustan Unilever (HUL), ITC (ITCS) and Marico from this sector. The brokerage has released this report after looking at the third quarter business updates of FMCGs companies. He said that from the business updates of these companies, he is seeing signs of improvement in consumer sentiment.
Nomura said in the report that competition among direct-to-consumer (D2C) brands may reduce in the coming days and the growth of quick commerce companies may support the demand of FMCG companies. The brokerage said that major companies may increase the prices of many of their products in the coming quarters, but this is not expected to have much impact on demand. Nomura estimates volume growth of 5.5% and EBITDA growth of 12% for large consumer staples companies, the brokerage said.
Nomura said that major FMCG companies can also benefit from the reduction in inflation and the policy steps taken by the government keeping consumers in mind. It set target prices for HUL, ITC and Marico at Rs 3100, Rs 575 and Rs 760 per share, respectively.
This report by Nomura comes at a time when the Nifty FMCG index is already down by about 14% from its peak of September 2024. Hindustan Unilever (HUL) shares have given negative returns of 5% in the last one year. ITC shares are in the news these days due to the news of demerger of its hotel business. 2024 was a disappointing year for this stock and it has given negative returns of 4 percent in the last one year.
However, Marico has given better returns than these two companies with 28 percent return in the last one year. Marico is one of Nuvama’s favorite stocks in the consumption sector. Citi has also advised to buy this share with a target price of Rs 750 per share.
Also read- Is 2025 going to be a bad year for the stock market? HSBC reduced Sensex target by 5,000 points
Disclaimer: The views and investment advice given by experts/brokerage firms on Moneycontrol are their own and not those of the website and its management. Moneycontrol advises users to consult certified experts before taking any investment decision.