Analysts stay positive on consumer and continue to recommend a basket of Titan, Asian Paints, Nestle, ITC and Godrej
Analysts prefer Titan and Asian Paints (as of now) as both have demonstrated better category resilience to the downturn. We have argued in the past that the retail space expansion, which has resulted in front ending of costs, will result in strong operating leverage driven earnings growth for Titan in FY16e (blue-sky value of NR560/share). Asian Paints had 5% and 11% volume growth in FY13 and FY14, arguably difficult periods for discretionary consumption
The consumer sector is still attractive per the “DB Consumer Momentum Indicator” despite three-month returns of >20% in many stocks under coverage. Our positive sector view remains intact; we now see prominent signs of an urban recovery (which was nascent in June), and the Consumer Confidence Index is now at a three-year high. Rationality in competition and many companies readying for a spate of new launches/brand re-stagings augur well for staples' growth.
