Analysts Back HUL, Britannia, Marico Amid GST Hiccups in Q2FY26

India's consumer sector faces challenges in Q2FY26 due to GST transition, erratic monsoons, and rising input costs. Analysts expect volume and revenue growth to remain moderate, with a rebound likely from November. Top picks include staples names like Bikaji Foods, Britannia, Nestle, HUL, and Tata Consumer Products. Discretionary favorites include United Spirits and Asian Paints. Companies are expected to outperform peers due to resilient portfolios, pricing power, and diversified exposure.

India's consumer sector is navigating a challenging second quarter (Q2FY26) due to a combination of factors including GST transition, erratic monsoons, and rising input costs. Analysts at Nuvama Institutional Equities expect volume and revenue growth to remain moderate, with a rebound anticipated from November as pricing stabilizes and deferred demand returns September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

The quarter has been marked by disruptions from GST 2.0 reforms, which have led to delayed purchases and cautious trade stocking, potentially impacting volumes and margins by 2-3 percent. While most companies have fully passed on the initial GST benefit to consumers, the transition has posed additional challenges, particularly for personal and oral care companies September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

Heavy rains in Q2FY26 have adversely affected seasonal categories such as carbonated drinks, ready-to-drink juices, beer, ice creams, and hair/skin summer care products. Companies like Varun Beverages, Emami, United Breweries, and Dabur are expected to face near-term revenue pressure due to these perishable categories September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

Top picks for the quarter include staples names such as Bikaji Foods, Britannia, Nestle, Hindustan Unilever (HUL), and Tata Consumer Products, while United Spirits and Asian Paints feature among discretionary favorites. These companies are expected to outperform peers due to resilient portfolios, pricing power, and diversified exposure September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

HUL, under new MD Priya Nair, reported that revenue growth is likely to be flat to low single-digit in Q2FY26. The company highlighted the short-term nature of this disruption, expecting recovery from November as price adjustments stabilize and channel inventory clears September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

Analysts expect pent-up demand to rebound in the second half of financial year 2026 (H2FY26), supported by the festival season and improved consumer confidence. Winter portfolios may benefit from a potentially harsh winter (December 2025-February 2026) due to a likely La Niña event, which could drive demand for immunity and skin care products September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

Input costs remain a focus. Palm oil, up 16 percent from May 2025 lows, could pressure margins for snacks and packaged food companies like Bikaji, Britannia, Nestle, and Gopal Snacks. Coffee remains elevated, supporting Tata Consumer’s plantation business, while tea prices have softened, aiding HUL and Tata Consumer margins September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

The government has provided flexibility on GST-related issues, including voluntary restickering, extended use of old packaging until March 31, 2026, and optional advertisement of revised MRPs. Liquor policy reforms in Delhi, such as lowering the beer drinking age and potential return of private outlets, could provide additional growth avenues for alcohol beverage players September quarter set for GST hiccups, analysts back HUL, Britannia, Marico^[1].

In summary, Q2FY26 is expected to be a transitional quarter for India’s consumer sector. Short-term GST and weather-related challenges are likely to weigh on volumes and margins, but the resilience of top-tier companies, supportive government policies, and a rebound in seasonal demand from November provide optimism for H2FY26.