Should you jump on the manufacturing stocks bandwagon? Jitendra Arora answers

economictimes.indiatimes.com:

Jitendra Arora, Sr EVP & Fund Manager, ICICI Pru, says in manufacturing, India still has a lot to catch up with a lot of economies and we can see the government providing a lot of thrust on that side with the most recent being the PLI on IT manufacturing. However, these things take time because the first is to move the manufacturing of the end product which will start with assembly then we will start getting the components to be manufactured into India.

The creation of that ecosystem is a very long drawn process but India has made a very good start.”One sector that has definitely stood out like a sore thumb in Q1 would be the consumption space. The volume growth slowdown is evident in the kind of numbers that a lot of the FMCG companies have reported. With high inflation do you believe this is going to be a bit of a stumbling block in the coming quarters? What is the outlook for the sector?We still believe it is more of a defensive sector in your portfolio.

And regarding the volume, again this is not one of the sectors where I am looking for volume growth of very high single digits. What you are looking for are mid single digits volumes, mid single digit pricing and perhaps overall top line growth of somewhere around 10-15% and earnings moving along the same pace.

However, the stocks seem to have disappointed and in fact it has not happened because of inflation; it has happened as the inflation is going away because as inflation is going away, we are seeing that unorganized players are coming back to the market to give competition to some of these players, which was not happening in last two or three quarters. Lever highlighted the same in their call and today Britannia also highlighted it.