The recovery in India’s consumption sector gathered pace in the second half of FY26, but whether that momentum can sustain into FY27 remains an open question, according to BofA Securities’ Senior Analyst for Consumer Goods, Aditya Mathur. Speaking to NDTV Profit, Mathur said both the third and fourth quarters showed encouraging signs across consumer categories, ranging from staples and paints to discretionary segments.
Looking at the sector from a two-to-three-year perspective, Mathur highlighted jewellery as one of the most resilient consumption themes. He said the category continues to benefit from formalisation trends despite recent concerns around supply tightening and a high base.
Beyond jewellery, he remains positive on businesses catering to premium consumers, including premium retail and select consumer staples companies. Rising incomes among upper-middle and affluent households should continue to support demand in these segments, making them relatively insulated from broader macro volatility, he said.
However, he cautioned that recent macroeconomic developments, particularly the Middle East conflict and rising inflationary pressures, have introduced fresh uncertainty around future demand. “We do see an acceleration in revenue growth, but a large part of that will essentially be pricing-led,” he said, adding that volumes may remain stable at best and could even soften due to inflation and higher product prices.
The comments come at a time when FMCG and consumption stocks have witnessed selling pressure despite reporting stronger quarterly numbers.
On valuations, Mathur said many large-cap consumption stocks have corrected meaningfully from their peaks, but are not necessarily cheap. He attributed the derating largely to earnings downgrades seen over the past two years. While earnings cuts have moderated recently, he believes it is still too early to declare a full-fledged recovery. “We are in a bit of an evaluation mode. There are still lots of moving parts,” he said.
Investor concerns have shifted from past earnings performance to the outlook for FY27, he noted. Higher fuel prices, rising commodity costs and inflationary pressures are already prompting companies to raise product prices, creating concerns about how consumers will respond.
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