Nestle, Varun Beverages, Jyothy Labs are top 3 picks of Axis Securities in the FMCG space post Q3

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Nestle India Ltd , Varun Beverages, Jyothy Labs are top 3 picks of Axis Securities in FMCG segment post the December quarter results. The consumer companies saw impact of weak demand on their December quarter performance even though the falling commodity prices provided cushion to their operating performance. “Most staple companies under our coverage have indicated a subdued demand environment, particularly in the mass end of the segment, as rural areas continue to face pressure", said analysts at Axis Securities.

Moreover, increased competitive intensity has further hampered volume growth. Anniversarization of price hikes and price cuts has resulted in muted topline growth as per analysts at Axis Securities. The companies though saw benefits of the falling commodity prices on their operating profits, nevertheless higher competition is likely to keep advertising spends elevated and thereby the further margins expansion still remains to be watched for.

Also Read- ABB India share price surges over 6% as Q4 result beat estimates; here's what analyst say While the FMCG companies have reported muted performance and volume growth was impacted due to sluggish rural demand and increased competitive intensity. However, there is optimism for demand recovery in the coming quarters, which will be driven by easing inflation, increased government spending, and higher remittances as per analysts at Axis Securities. Top 3 Picks of Axis Securities in the FMCG space include Nestle India- Nestle remains amongst top pick of Axis Securities with a target price of ₹2800.