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The apparel & retail sector witnessed a mixed performance in 3QFY26, with value fashion witnessing moderation and premium segments showing steady growth supported by festive demand and GST tailwinds, while delayed winter, festive calendar shifts, competition, and store cannibalization weighed on SSSG across several formats. Alcoholic Beverages sector is expected to deliver healthy growth led by the P&A segment, with stable margins supported by softer raw material prices, even as mass segment volumes remain impacted by price hikes in the state of Maharashtra and Andhra Pradesh becoming part of the base. Jewellery players reported robust growth driven by strong festive and wedding demand, higher gold prices, and elevated old-gold exchanges, though margins are likely to moderate due to continued investments and a higher mix of coins. The QSR sector continues to face muted consumption amid intense competition and weather disruptions, partially offset by GST 2.0 benefits, festive-led demand, and continued store expansion by key operators. Our preferred picks include Arvind Fashions, Aditya Vision, Radico Khaitan and Allied Blenders and Distillers.

Apparel & Retail

The apparel and retail sector continues to demonstrate a polarised performance across categories, shaped by uneven consumer demand, base effects, and regional variations arising from the shifting festive calendar. While the festive and wedding seasons provided a broad-based demand impetus, sector performance remained mixed due to headwinds such as the delayed onset of winter and recent tax adjustments, resulting in varied outcomes across formats and price points.

At the company level, value retailers delivered steady growth, although performance was impacted by the festive shift and delayed winterwear demand. V-Mart Retail is expected to report ~10% YoY revenue growth, with flat SSSG. V2 Retail is anticipated to post ~57% YoY revenue growth, supported by SSSG of ~2%. Baazar Style Retail is likely to report ~13% YoY revenue growth, albeit with negative SSSG of ~14%. Trent witnessed a moderation in growth, with revenues increasing by ~17% YoY. The slowdown in SSSG was driven by store cannibalisation from new store additions near high-performing locations, heightened competition within the value fashion segment, and a high base effect. Premium formats benefitted from festive demand trends, although ethnic wear performance was impacted by a lower number of wedding days during the quarter. Arvind Fashions is expected to report ~11% YoY revenue growth, with retail LTL growth of ~6%, led by a healthy performance from US Polo Assn. and adjacent categories. Aditya Birla Fashion and Retail Ltd. (ABFRL) is expected to deliver ~17% sequential revenue growth, driven by strong traction in the Tomorrow brands portfolio and ethnic wear, partially offset by softness in Pantaloons due to festive sales being preponed to 2Q. Aditya Birla Lifestyle Brands Ltd. (ABLBL) is expected to report ~16.6% sequential growth, led by Lifestyle brands. In the innerwear segment, demand remained subdued. Page Industries is expected to report ~4.4% YoY revenue growth, supported by low singledigit volume growth. The GST rate reduction on mid-premium apparel price points (below Rs 2,500) is expected to act as a structural tailwind for brands such as Westside, Pantaloons, and select segments within the Arvind Fashions and ABLBL portfolio. Within broader retail, DMart is expected to report ~13.2% revenue growth in 3QFY26, impacted by intensifying competition from quick commerce players, deflationary trends in select categories, and dilution and cannibalisation effects from rapid store expansion. In electronics retail, Aditya Vision is expected to report ~21.5% YoY revenue growth, with demand accelerating during the festive season following GST rate reductions.

Alcoholic Beverages (Alco-Bev)

The Prestige & Above (P&A) segment is expected to report healthy growth in 3QFY26. The mass category is likely to be impacted due to price hikes in Maharashtra and Andhra Pradesh forming part of the base. Margins are expected to remain stable, supported by softer raw material prices. Radico Khaitan is expected to report mid-teen volume growth. Tilaknagar Industries is anticipated to post low-teen volume growth. Allied Blenders and Distillers is expected to report low single-digit volume growth, although the P&A growth trajectory is expected to remain intact.

Jewellery Retail

Jewellery companies are expected to report robust growth across the board, driven by strong demand during the wedding season and Diwali/Dussehra festivities. Titan reported standalone jewellery growth of ~41% YoY, despite a high base, reflecting sustained festive and wedding-led demand. Jewellery margins are expected to compress, driven by continued investments and a higher contribution from the coins segment. Kalyan Jewellers’ India operations reported ~42% YoY growth, with broad-based demand across plain gold and studded jewellery, and SSSG of ~27%. Average gold prices have increased by ~65% YoY in rupee terms. Demand was further supported by higher old-gold exchange-led purchases and attractive promotional offers.

Quick Service Restaurants (QSR)

The QSR sector continues to face muted consumption trends, driven by heightened competitive intensity and weather-related disruptions, resulting in soft demand across most operators. However, key tailwinds include the implementation of GST 2.0 during the quarter, with players passing on part of the benefits to consumers, alongside a festive-led uptick in sales. Jubilant FoodWorks reported ~11.8% YoY revenue growth and ~5% LFL growth in its standalone business. While growth moderated versus expectations, performance remains resilient given the elevated base. Devyani International and Sapphire Foods are expected to report muted SSSG, reflecting broader consumption weakness across the sector. Despite near-term demand challenges, store expansion plans remain intact, particularly for Devyani. Restaurant Brands Asia (RBA) is expected to deliver an SSSG recovery to ~6% YoY, supporting an improvement in both growth momentum and margins.

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