Colgate, Britannia And More: Abneesh Roy Lists These FMCG Stocks As Post-Election Picks

The recent state elections have reaffirmed the trend of welfare-driven mandates, with freebies emerging as a key strategy for political parties. Analyst Abneesh Roy of Nuvama noted that these measures, while challenging for macroeconomic stability, present a growth opportunity for Fast Moving Consumer Goods companies, particularly in rural markets.

Roy named Colgate-Palmolive (India), Britannia, Bikaji, Hindustan Unilever, and Emami as top picks to benefit from this trend. He added that companies like Marico, Godrej Consumer, ITC, Varun Beverages, and Dabur are also likely to see gains.

Roy highlighted that in Maharashtra and Jharkhand, ruling governments received significant mandates, driven by the resonance of welfare schemes such as the Ladki Bahin Yojana and Maiya Samman Yojana. These Direct Benefit Transfer initiatives targeting women were pivotal in swaying voters. “We expect all states to adopt similar freebies as a template,” he noted.

This shift is expected to stimulate rural consumption, compensating for the urban slowdown that has impacted the FMCG sector.

On the other hand, the FMCG sector has faced muted demand in recent months. Reports from Axis Securities and Antique Stock Broking highlighted weak festive sales, urban consumption pressures, and the delayed onset of winter, which hindered sales of seasonal products. Heavy rainfall and increased competition further strained topline growth in the second quarter.

While urban markets remain under pressure, the anticipated uptake of winter portfolios in November is expected to provide some relief.

The Maharashtra government’s Ladki Bahin Yojana, a flagship welfare program, has significantly increased the state’s revenue expenditure. According to Emkay Global Financial Services, this scheme will cost Rs 46,000 crore annually, equivalent to 1.1% of the Gross State Domestic Product. Additional populist measures, including youth training programs and free electricity for farmers, have brought the total budget allocation for such schemes to Rs 96,000 crore, or 19% of state revenue.

Despite these financial pressures, the National Democratic Alliance’s landslide victory in Maharashtra has bolstered market sentiment.

The decisive win is expected to bring political stability and pave the way for infrastructure development, making the state a more attractive destination for investment.

Abneesh Roy is the executive director of Nuvama Institutional Equities and he tracks equities, energy, consumer products, media, consumer discretionary and consumer staples.

The views expressed in the report are that of the analyst and do not represent the views of NDTV Profit.