FMCG, Retail Q2 Results Preview - Rural Recovery To Take Centre Stage: Axis Securities

Axis Securities Report

FMCG

FMCG companies under our coverage are expected to experience a recovery in volume growth. Revenue growth will primarily be driven by volume growth in the low to mid-single digits, led by improved rural sentiments.

Rural growth is expected to outpace urban growth. Companies with higher share of rural distribution alongside those expanding their geographical footprints, are expected to outperform their FMCG peers.

Considering these factors, we anticipate HUL, Nestle, Jyothy Labs, and Varun Beverages to lead the overall revenue growth for the sector.

Retail

The overall revenue growth trend for the retail sector is expected to vary, reflecting a mixed-bag performance, as discretionary spending continues to remain subdued. Premium retailers such as Trent and Ethos are anticipated to perform better while value retailers (Relaxo, V-mart, D-mart) will see gradual recovery.

Quick-service restaurant players are likely to experience subdued samestore sales growth performance and increased upfront costs associated with store openings.

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