Marico, Radico Khaitan, United Breweries, HUL, Tata Consumer: Brokerage shares top BUYs; here are Q2 expectations

Nuvama Institutional Equities has identified Marico Ltd, Radico Khaitan Ltd, United Breweries Ltd, Hindustan Unilever Ltd (HUL) and Tata Consumer Products Ltd among its top 'BUY' picks in the consumer space ahead of the September quarter (Q2 FY27) earnings season.

Marico

For Marico, the domestic brokerage expects consolidated revenue to grow around 20 per cent year-on-year (YoY), while overall volumes are estimated to rise 9 per cent YoY. The brokerage expects growth to be led by Parachute, Value-Added Hair Oils (VAHO) and digital initiatives.

Parachute sales are estimated to grow 7 per cent YoY, with volumes rising 5 per cent. VAHO revenue is expected to increase 22 per cent YoY, while Saffola Foods is projected to grow 10 per cent. Within Saffola Foods, the brokerage expects the foods franchise to grow more than 40 per cent YoY.

Nuvama expects Marico's international business to grow 15 per cent YoY in constant-currency (CC) terms. Gross margin is estimated to expand 285 basis points (bps) YoY to 45.5 per cent, while EBITDA margin is expected to rise 52 bps to 16.6 per cent.

Radico Khaitan

For Radico Khaitan, Nuvama expects consolidated revenue to expand around 11 per cent YoY and EBITDA to rise 29 per cent YoY. Overall volumes are estimated to decline around 1 per cent YoY, with premium-and-above (P&A) revenue and volumes expected to increase 26 per cent YoY each.

The brokerage expects mass-premium revenue and volumes to decline around 23 per cent and 17 per cent YoY, respectively. Gross margin is projected to expand 435 bps YoY to 48 per cent, while EBITDA margin is expected to increase 260 bps to 18.5 per cent.

United Breweries

Nuvama expects United Breweries' net revenue to increase around 16 per cent YoY, supported by premiumisation, volume growth and pricing. Overall volumes are projected to rise 20 per cent YoY, while premium-segment volumes are estimated to grow 17 per cent.

The brokerage said Karnataka has reported a strong recovery in volumes following policy changes, while Maharashtra continues to grow robustly.

EBITDA is expected to surge 56 per cent YoY, although gross margin is projected to decline 223 bps to 40.7 per cent due to higher glass and can costs. EBITDA margin is estimated to expand 218 bps to 8.5 per cent, aided by productivity initiatives.

HUL

For HUL, Nuvama expects consolidated revenue to grow 13 per cent YoY on a like-to-like (LTL) basis, excluding ice cream from both periods (Q2 FY26 and Q2 FY27), led by 7 per cent volume growth and around 6 per cent pricing growth. EBITDA is expected to increase 8 per cent YoY.

The brokerage expects HUL's net revenue to expand 13 per cent YoY, while consolidated volumes on a LTL basis are estimated to grow 7 per cent.

Nuvama expects gross margin to decline 221 bps YoY to 48.3 per cent, while EBITDA margin is estimated at 23.1 per cent. PAT is projected to grow 8.5 per cent YoY.

The brokerage expects tea volumes to remain muted during the quarter, citing weakness in the first half of Q2, LPG availability issues affecting out-of-home consumption and the impact of delayed monsoons.

Tata Consumer Products

Nuvama expects Tata Consumer's consolidated revenue to expand around 13 per cent YoY in Q2 FY27, with India branded volumes growing 11 per cent. EBITDA is projected to increase 16 per cent YoY.

Tea growth is expected to remain broadly flat YoY, with volumes also likely to remain flat, according to the brokerage. It said the negative impact on tea is normalising, although the business is now facing a higher base and the earlier LPG-related issue still remains.

Salt growth is expected to remain healthy, supported by 6-7 per cent pricing and around 7 per cent volume growth, implying revenue growth of around 13-14 per cent, Nuvama said.

The brokerage expects Tata Consumer's growth businesses to expand around 30 per cent YoY. Sampann is estimated to grow around 50 per cent, Soulfull 40 per cent and RTD business NourishCo around 30 per cent.

International CC growth is expected at around 2 per cent, with reported growth at around 10 per cent in rupee terms. Nuvama said USFDA-related issues are affecting Organic India (OI) in Q2.

Non-branded business growth is expected to recover to around 10 per cent YoY as shipment delays seen in Q1 phase out. Overall EBITDA margin is estimated to expand 37 bps YoY to 13.9 per cent.

Separately, BNP Paribas India said the FMCG sector appears well placed for sales growth in Q2 FY27, although margins are likely to remain under pressure.