Whalesbook
India's consumer discretionary sector is poised for a mixed performance in the December quarter, with premium segments outperforming while mass demand shows signs of strain. Elara Securities' preview highlights continued momentum in alcobev and fashion, driven by consumers willing to spend on aspirational brands.
Premium Segments Drive Growth
The spirits segment is expected to see strong traction, with Radico Khaitan anticipated to lead due to robust volume growth in its Indian-made foreign liquor (IMFL) portfolio. Elara estimates IMFL volumes to rise approximately 16% year-on-year, supported by new launches and brand extensions. Easing grain prices are also projected to boost Radico Khaitan's EBITDA margins to around 15%.
United Spirits, however, faces muted volume growth due to regional pressures and higher operating costs, potentially compressing margins despite improved realisations.
Mass Market Challenges Persist
The beer category is likely to remain under pressure, with United Breweries facing a slight volume decline attributed to weak demand in key states and unfavorable weather. While lower input costs may offer some margin relief, short-term headwinds persist.
Quick-service restaurants (QSRs) are also bracing for a subdued quarter. Same-store sales growth is expected to remain below forecasts across pizza, burger, and fried chicken formats, with discounting impacting margins. Jubilant FoodWorks is projected to outperform, but operators like Devyani International and Sapphire Foods may struggle with weaker footfalls.
Fashion and Online Retail Strength
Fashion retail remains a significant bright spot. Trent is forecast to post around 20% year-on-year revenue growth, driven by aggressive store expansion in its Zudio and Westside formats. Online beauty and fashion retailer Nykaa is also expected to sustain growth, with gross merchandise value in both its beauty and fashion verticals likely to increase by approximately 30%.