Motilal Oswal has highlighted Titan, Radico Khaitan, Restaurant Brands Asia, Zydus Wellness, and Marico as key picks for the second quarter of FY27. While consumer demand remains steady, rising costs for gold, crude oil, and agricultural commodities are putting pressure on profit margins. Investors should watch how these companies balance price hikes with volume growth in their upcoming results.
As the Indian consumer sector heads into the second quarter of fiscal year 2027 (2QFY27), brokerage firm Motilal Oswal has released its latest outlook, flagging specific companies that it believes are better positioned to navigate the current environment. The brokerage has identified Titan, Radico Khaitan, Restaurant Brands Asia, Zydus Wellness, and Marico as its top picks for the quarter.
While the report indicates that consumer demand remains resilient across most categories, the main challenge for these companies is a persistent rise in raw material costs. Specifically, prices for gold, crude oil, and agricultural commodities have remained high. This inflationary pressure is creating a squeeze on EBITDA margins—a key measure of a company's operational profitability before accounting for interest, taxes, and other financial costs. To protect their bottom lines, many companies are now forced to rely on a combination of price increases and changes to their product mix, which involves shifting the sales focus toward higher-profit items.
Sectoral Growth Trends
The research reveals a clear divide in performance expectations across different parts of the consumer sector. The jewellery and Quick Service Restaurant (QSR) segments are projected to lead the growth momentum. For jewellery companies, revenue and EBITDA are estimated to grow by 23% and 26% respectively. Similarly, QSR operators are expected to see solid performance with growth rates near 15% to 20%. In contrast, the broader staples segment—which includes essential household goods—is expected to show more moderate growth metrics compared to these high-performing areas.
Investor Monitorables
For investors, the most critical factor to track in the coming weeks will be how these companies manage their pricing power. While inflation in inputs like gold and crude oil is a known reality, the risk lies in whether companies can fully pass these costs on to the consumer without hurting demand. If price hikes are too steep, it could lead to lower sales volumes, which would offset the benefits of higher prices.
Investors should look for signs of margin recovery in the upcoming quarterly results. The ability of a company to maintain or improve its profit margins despite rising input costs will be a key differentiator. The overall success of these firms this quarter will depend on whether they can sustain their growth momentum while managing the impact of sustained raw material inflation on their profitability.