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1QFY26E preview: Status quo on demand

Our expectations: (1) Staples—marginal improvement in yoy revenue growth trends for select names; continued margin pressure owing to the consumption of high-cost RM inventory; and (2) Discretionary—robust growth print in JUBI, PIDI and TTAN, stability in cigarettes and footwear; continued weakness in paints and QSR (ex-JUBI); washout quarter for VBL (weak summer). We expect a decent 1Q print from JUBI, PIDI, UBBL, MRCO and TTAN, and a weak quarter from VBL, CLGT, DABUR, UNSP and paints.

Staples—improving value growth trend; margins decline yoy due to RM inflation

We expect stable-to-improving value growth trends for a few FMCG names, with demand mirroring prior-quarter trends (gradual rural recovery and subdued urban demand). Pricing interventions to counter RM inflation are expected to drive qoq improvement in topline growth trajectory for most. Within the pack, we expect revenue growth of (1) ~23% for MRCO (9% UVG), (2) 12% for TATACONS, (3) ~9%/6.6% for BRIT/NEST; 6.5% for GCPL (6.4% standalone), and 6% for HONASA, and (4) 3.7% for HUVR (3% UVG), 1.8% for JYL, 0.6% for DABUR ((-)2% standalone), and ~3.5% decline for CLGT. On profitability, we expect margin decline (yoy) across the board, owing to the consumption of high-cost RM inventory; easing RM prices should aid margins starting 2QFY26.

Discretionary: JUBI/PIDI/TTAN resilient, weakness in QSR (ex-JUBI)/Paints/VBL

Paints + PIDI: Paints’ value growth was weak as demand remained subdued. Volume/value growth stood at 4%/0.5% for APNT (better than 2HFY25), 8%/3% for BRGR, and 2%/(-)1% for KNPL decorative segments. APNT’s EBITDA would be flat (yoy), while we expect BRGR/KNPL to report 10%/(-)8% yoy growth. We expect INDIGOPN to report 1-2% value growth. We estimate relatively robust 9.2% growth for PIDI (standalone), led by 7%/8.3% UVG/value growth in domestic C&B business, and health 24%+ consolidated EBITDA margin.

QSR and footwear: Weak demand trends continued in QSR (except JUBI)–(1) JUBI: should sustain growth momentum and deliver a robust 11.5% LFL growth, resulting in 18%/23% yoy revenue/pre-Ind AS EBITDA growth; (2) WESTLIFE/BK India: 9%/12% yoy revenue growth and 1-2%/3% SSSG; (3) DIL/SF: flat SSSG for KFC each and 4%/7% SSS decline for PH; EBITDA margin for both is expected to be weak, largely due to adverse operating leverage; and (4) in footwear, we expect CAMPUS/METROBRA to report 6%/10.3% yoy revenue growth.

Jewelry, cigarettes and beverages: (1) Titan: we estimate standalone recurring jewelry sales growth of 17.5% yoy (gold price up ~32% yoy), 150 bps yoy drop in studded salience to 24.5% and EBIT margin at 10.8% (down 40 bps yoy), (2) ITC: 4.5%/6%/3.2% volume/value/EBIT growth in cigarettes and 5%/6.8% revenue growth/EBIT margin in FMCG; overall weak EBITDA print, owing to inflationary pressure, (3) VBL: washout quarter with 3%/4%/12.5% decline in consolidated volume/revenue/EBITDA, led by 5% volume decline in India (weak summer) and softness in Africa (except SA), (4) UNSP: 6.5%/7% volume/value growth in P&A and 17.6% EBITDA margin, (5) UBBL: 6.5%/11.2% yoy volume/value growth on a weak base and 13.2% EBITDA margin, (6) IGIL: 13.5/39.5% growth in revenue/EBITDA, and (6) Cello: 12% value growth

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