With the Q2 earnings season knocking on the door, Nomura expects demand to be largely stable despite the full effect of price hikes. It anticipates increased pressure on margins from higher-priced inventory. It expects volume growth to be largely stable sequentially, while pricing growth will be higher. The international brokerage estimates average EBITDA growth to moderate sequentially for its covered companies to 13.8% YoY, much above its eight-quarter average growth of 7% YoY. Here is a list of 17 consumer stocks on which Nomura has a ‘Buy’ call and its respective target prices.

Hindustan Unilever (Buy | Target price: Rs 2,450)

Nomura has a ‘Buy’ call on the shares of Hindustan Unilever (HUL) with a target price of Rs 2,450 apiece, implying 31% upside potential. The international brokerage expects the company’s volume growth to be similar to Q1 at 5% despite a soft Q2 base last year.

ITC (Buy | Target price: Rs 340)

Nomura has a ‘Buy’ call on the shares of ITC with a target price of Rs 340 apiece, implying 28% upside potential. The international brokerage expects cigarette volumes to decline 7.5% YoY due to sharp price hikes. It forecasts the FMCG segment to continue its growth trajectory, while margins could face sequential pressure due to high commodity prices.

Also read |Indian markets are not vulnerable: Sebi chief Tuhin Kanta Pandey remains optimistic even as Sensex, Nifty bleed

Nestle India (Buy | Target price: Rs 1,675)

Nomura has a ‘Buy’ call on the shares of Nestle India with a target price of Rs 1,675 apiece, implying 25% upside potential. The international brokerage expects Nestle India to sustain its strong growth momentum and report healthy volume, along with mix growth of 17% YoY, leading to overall sales growth of 23% YoY, before it starts cycling a high base from Q3 onwards.

Tata Consumer Products (Buy | Target price: Rs 1,475)

Nomura has a ‘Buy’ call on the shares of Tata Consumer Products with a target price of Rs 1,475 apiece, implying 53% upside potential. The international brokerage expects the company to report a marginal sequential improvement of revenue growth to 12.5% YoY, supported by small price hikes, and continued strong trajectory of growth businesses. “We anticipate flat performance on a constant currency basis, with reported sales growth of 5% y-y driven solely by foreign exchange benefits. We expect non-branded sales growth of 10% y-y, on a high base,” it added.

Also read | Will RBI rate hikes intensify selloff in bank stocks? Analysts explain why fears may be overdone

Marico (Buy | Target price: Rs 1,000)

Nomura has a ‘Buy’ call on the shares of Marico with a target price of Rs 1,000 apiece, implying 26% upside potential. The international brokerage expects the price-cuts taken by the company to support Parachute volume and result in overall volume growth of 8.5% YoY. “We expect its growth-business, including the new acquisition, is likely to continue its strong growth trajectory,” it added.

Allied Blenders (Buy | Target price: Rs 850)

Nomura has a ‘Buy’ call on the shares of Allied Blenders with a target price of Rs 850 apiece, implying 19% upside potential. The international brokerage expects P&A volume growth to improve sequentially to 13.5% YoY, led by Karnataka, while the mass premium segment should report volume growth of 7.7% YoY supported by the non-whisky portfolio, driving overall volume and sales growth of 10.4% YoY

Lenskart Solutions (Buy | Target price: Rs 888)

Nomura has a ‘Buy’ call on the shares of Lenskart Solutions with a target price of Rs 888 apiece, implying 32% upside potential. The international brokerage expects Lenskart to sustain its India volume growth at 23% YoY, similar to Q1, and clock 25% YoY volume growth in the international business, which is likely to drive overall volume growth at 23.5% YoY for the company.

Titan (Buy | Target price: Rs 5,425)

Nomura has a ‘Buy’ call on the shares of Titan with a target price of Rs 5,425 apiece, implying 16% upside potential. The international brokerage expects the jewelry business to report strong sales growth of 25% YoY as the last week of September will see the impact of Shradh vs a high base of last year.

Also read | Can NSE shares trade on its own platform? Sebi chief says no panel considering self-trading in exchange shares

Other top consumer picks

The other consumer stocks that have a ‘Buy’ recommendation from Nomura include Dabur, Colgate India, EPL, Asian Paints, Berger Paints, Kansai Nerolac, Britannia Industries, Godrej Consumer and United Spirits.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.