Jefferies has flagged a subdued performance for the consumer staples sector in 2QFY25, citing slower revenue growth, margin pressure, and muted urban demand. Net earnings for the coverage companies declined by 2% YoY, with six out of 12 companies underperforming expectations.
Key laggards included Honasa and Dabur, affected by inventory corrections, Nestle, which faced weak volume growth, and Britannia, which struggled with margin pressures. These challenges have weighed on investor sentiment, leading to underperformance in the broader FMCG index.
However, Jefferies remains optimistic about recovery in select names, maintaining Colgate, Marico, and GCPL as its top picks for their resilience and ability to navigate the challenging macroeconomic environment. The brokerage sees potential for these companies to benefit from easing inflation and improved consumer sentiment in the medium term.
