A key positive for the sector was the stability of commodity prices, especially for basic products, which supported gross margin expansion and operating leverage. Premiumization trends, especially in discretionary categories such as alcoholic beverages, continued to drive margin improvement. QSR players also reported sequential margin expansion, helped by better economic conditions at the store level and an improvement in average daily sales. However, product mix issues persisted in certain segments, highlighting an uneven recovery in profitability.
Cooling inflation, supportive government initiatives and improving affordability emerge as important catalysts for the recovery of consumption. Moreover, normalization of trade channels post GST adjustments and expectations of a strong summer season are likely to support demand momentum in the near term. Premiumization, formalization and category shifts towards organized players continue to shape industry dynamics in the long term.
While the sector is on a recovery path, the pace remains uneven across categories. The staples and food sectors are expected to maintain steady growth, while the durable sectors may see a sharper recovery as demand conditions continue to normalize. Input cost stability and operating leverage should continue to support margins. Overall, the medium-term outlook remains constructive, driven by improving macro conditions and structural consumption factors, although near-term performance may vary by segment.
Titan Company: Buy| Target Rs 5000
Titan delivered a blockbuster quarter, cementing its leadership in the organized jewelry market through strong festive traction, compelling collections, impactful brand campaigns and effective exchange programs. Continued store expansion and scaling of non-jewelry segments further strengthen competitiveness and support growth momentum across all categories. In Q3 26, consolidated sales increased 43% year-on-year, while standalone jewelry (ex-precious metals) increased 40%. Growth moderated, impacting the mix, while EBIT margin contracted 60 basis points to 10.6%, despite healthy EBIT growth of 32%. Watches and eye care posted steady gains, reflecting broad resilience in demand. We remain constructive, supported by Titan’s superior sourcing, seeded strategy, youth focus and reinvestment intensity, which maintain brand strength and pricing power. We model a CAGR of 23%/25%/27% in revenue/EBITDA/APAT over FY25-28E.
Britannia Industries: Buy| Target Rs 7150
Britannia Industries reported solid performance for Q3’26, with 9.5% year-on-year revenue growth despite GST-related disruptions in October, with momentum recovering to ~12% revenue growth in Nov-Dec, delivering 22% EBITDA growth and 18% PBT growth on strong traction from biscuits and adjacent categories. With 60-65% of its portfolio in INR5/INR10 LUP packs, Britannia is well positioned to benefit from the GST rate revision, supporting volume growth. Stable raw material costs and a sharper distribution focus further strengthen the competitive position. Looking ahead, the earnings outlook remains strong, supported by improving consumption trends, distribution expansion, product innovation and continued brand investment under the new CEO. We model a revenue CAGR of 12% and 14% PAT CAGR over FY26-28E, indicating continued growth momentum.
(The author is Siddhartha Khemka, Head of Research – Wealth Management, Motilal Oswal Financial Services)
(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These do not represent the views of the Economic Times)
#Titan #Company #shines #Britannia #Industries #remains #stable #consumer #stocks #participate