HDFC Sec forecasts mixed Q2FY27 for Indian FMCG; prefers Nestlé, Bikaji
HDFC Securities anticipates 12% revenue growth for Indian FMCG firms in Q2FY27 but warns of margin pressure from raw material inflation, maintaining an underweight sector stance.
Indian FMCG Q2FY27 Outlook
HDFC Securities (HSIE Research) projects a varied second quarter of fiscal year 2027 (Q2FY27) for Indian Fast-Moving Consumer Goods (FMCG) companies. The brokerage anticipates an approximate 12% year-on-year revenue expansion across its covered firms. This growth is expected to stem from a lower comparative base from the previous year and strategic price increases. However, HSIE warns that sustained raw material inflation will likely compress profit margins for the sector.
Brokerage Maintains Underweight Stance
HSIE Research has reaffirmed its 'underweight' rating on the Indian FMCG sector. The brokerage cites persistent weak earnings visibility and a perceived erosion of competitive advantages as primary reasons for its cautious outlook.
Despite this overall sector stance, HDFC Securities expressed a preference for companies demonstrating stronger operational execution, indicating a selective approach to stock recommendations within the segment.
Key Stock Targets and Forecasts
Among its preferred stocks, HSIE upgraded Nestlé India to 'Buy,' setting a target price of ₹1,555, which implies a 19% upside from its current market price of ₹1,308. The brokerage forecasts 21% revenue growth, 30% EBITDA growth, and a 37% increase in adjusted profit after tax (PAT) for Nestlé India in Q2FY27.
Bikaji Foods holds the highest projected upside among HSIE's preferred names at 39%, with a ₹700 target, despite an expected 15% decline in adjusted PAT.
Investors in the Indian FMCG sector will likely prioritise companies that can effectively manage costs and deliver earnings growth, rather than merely achieve topline expansion. HSIE's selective recommendations underscore the importance of strong operational performance in a challenging inflationary environment.
Further guidance on sector performance will depend heavily on company commentary regarding demand trends in the upcoming festive quarter, which could clarify future earnings trajectories.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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