Demand in the FMCG market had been subdued in the July-to-September quarter, with volumes in rural markets declining 1 percent on a two-year CAGR basis. Urban volumes, however, increased 3 percent on a two-year basis.
Consumption-related stocks, such as hotels, and quick service restaurants (QSRs), have been hitting the ball out of the park ahead.
On the other hand, the Miss World Pageant scheduled for later this year in New Delhi, too, could provide some tailwind to these stocks, especially hotels and aviation.
However, analysts suggest investors put their best foot forward and buy these counters only on a decline given the recent rally and economic headwinds.
On the brighter side, Dabur expects Q2 gross margin to expand at a faster pace than Q1 when the metric had risen by 74 basis points year-on-year to 46.6%.
Companies including Nestle and Dabur are betting on smaller packs and low price points to woo value-conscious consumers in rural areas and small towns.