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We estimate our coverage universe to report sales, EBITDA and PAT growth of 11.2%, 4.9% and 4.2%, respectively, on 38bps YoY EBITDA margin contraction. Staples coverage universe will post growth of 1.4%/-2.6% YoY in sales/EBITDA, while ex-ITC, sales/EBITDA/PAT growth is likely to be 10.8%/11.7%/12.1%. QSR will report increase of 11.2% in sales and 20.1% in post-IND AS EBITDA. Retail is likely to show 25.6% increase in sales and 24% growth in EBITDA led by jewelry segment. Paints will show 16.3% increase in sales and 16.9% growth in EBITDA on 11bps EBITDA margin expansion.

For FMCG, rural grew ahead of urban areas and recent price increases have been well absorbed. FMCG witnessed resilient demand trends in Q1 with steady volume growth QoQ, except for ITC, where sharp increase in excise duty on cigarettes will weigh heavily; however, the FMCG and paper businesses are expected to be saviors. NEST, BRIT and MRCO will report strong EBIDTA growth.

QSR demand improved QoQ as LPG-related issues are mostly resolved across chains; Q1 margins may remain under pressure amid elevated energy costs. Jewelry continued to deliver strong value growth led by ~60% higher gold prices YoY, festival/ wedding season, and demand revival post ~20% correction in gold prices from peak levels. The paints segment witnessed healthy demand, aided by continued pre-price hike stocking and delayed monsoon. Food & grocery retail remained intensely competitive, with extreme heat impacting footfalls in GT and MT. Footwear demand remained steady, although input cost inflation is likely to weigh on margins in the near term.

Demand outlook remains cautious due to likely impact of El Nino and monsoon activity, but easing crude prices will provide a tailwind. We rate TTAN and BRIT as top picks in the consumer universe. We are also constructive on MRCO, METROBRA and PIDI.

Staples volumes improve QoQ, margins to come under pressure

Rural demand has remained resilient, while urban demand has exhibited an improving trajectory, showing impact of GST-led gains. Most staple companies saw higher input costs, which led to 3-6% price hike in several products across food, HPC and personal care. Despite price hikes, volumes remained strong as current prices in many products are lower than pre-GST prices.

Summer demand for beverages and personal care remained strong after a subdued start as intense heat led to higher demand. Home care showed steady demand even as competitive intensity remained high.

Biscuit demand remained steady as dual pricing impact is waning as Parle, ITC, etc., have moved to INR5/10 packs starting 3rd week of Mar’26. Although INR4.5/9 packs in a few brands are still visible in GT, the issue seems largely behind.

Cigarette industry saw the impact of price hikes due to sharp increase in excise duty. We understand that the industry is yet to fully pass on the impact, which will likely weigh on net realizations and profitability.

While easing inflation and crude prices are positive, a lot depends upon El Nino as the shortfall in monsoon can impact agriculture, increase inflation and affect rural demand in the coming quarters. The trajectory of rainfall over the next 3-5 weeks will be a key determinant of the inflation/rural demand outlook.

We estimate QoQ improvement in volume growth for most staple companies. Impact of higher input costs will result in some margin pressure at GM level, but overall profit growth will be higher than past few quarters.

We expect NEST to report highest EBITDA and PAT growth at 27.3% and 29.4%, respectively, in staples, led by strong growth in sales and low margins in Q1FY26. We expect double-digit EBITDA growth for MRCO, DABUR and BRIT. HUL and CLGT will report mid-to-high single digit EBITDA growth. ITC is likely to report EBITDA decline in teens due to volume decline and margin pressure in cigarettes and Agri, partly neutralized by strong growth in the FMCG and paper businesses.

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