Stocks to buy: Nuvama lists 6 FMCG picks including ITC from a 4-5-year perspective; take a look

ITC: The brokerage sees ITC delivering a 4-year and 5-year net profit CAGR of 10.8% and 11.5%, respectively. Meanwhile, its 4-year and 5-year revenue CAGR is expected at 10.1% and 10.3%, respectively. By dint of its focus on digital adoption, customer centricity and agility, ITC continues to deliver strong growth across segments, said Nuvama. It expects ITC, being the largest legal player in cigarettes, to gain market share from illegal players. In the FMCG business, the company would like to see market share gains across most categories. EBITDA margin expansion is on the right trajectory, it added.

Britannia: The brokerage expects a 4-year/5-year revenue CAGR of 9.9%/10.2% for the firm, whereas its 4-yr/5-yr profit CAGR is likely to be 13.9%/14.2%. As per the brokerage, Britannia continues to focus on driving product portfolio expansion as well as scaling up distribution to drive growth. It believes Britannia’s focus on revenue growth instead of only margin expansion would help it scale up growth in coming quarters. The brokerage likes the growth trajectory of adjacent businesses and expects them to have good salience and contribute to profitability as they flourish.

Nestle: The company's 4-year/5-year revenue and PAT CAGR are seen at 10.6%/11% and 10.4%/14.3%, respectively. The brokerage argues Nestlé is one of the best plays in the Indian processed food industry with multiple growth drivers and established brands across food categories. The introduction of new brands from the global portfolio and entry into new categories are positive too, it added.

Asian Paints: The company's 4-year/5-year revenue and PAT CAGR is seen at 15.6%/15.4% and 16.7%/15.2%, respectively. APL saw strong growth overall, with the domestic decorative segment expanding by double-digits in terms of both volumes (16% YoY) and value in Q4FY23, noted the brokerage. It is the no. 1 player in waterproofing from a Retail point of view and no. 2 in adhesives, added Nuvama. Going ahead, Nuvama expects double-digit decorative volume growth to sustain, riding a potential demand shift from the unorganised segment along with an improving margin profile.

Berger Paints: The brokerage sees Berger Paints delivering a 4-year and 5-year net profit CAGR of 13.7% and 14.1%, respectively. Meanwhile, its 4-year and 5-year revenue CAGR is expected at 14.9% and 15.4%, respectively. The brokerage noted that the company's consolidated top line crossed ₹10,000 crore in FY23, and the company continued to gain market share during the year. The total market share hovers within 18–20%. It aspires to be the fastest-growing listed paint company and would complete 100 years in Dec-23, stated Nuvama and expects Berger to return on its strong growth run on the back of sharp distribution expansion and product launches.

Hindustan Unilever: The brokerage expects a 4-year/5-year revenue CAGR of 11.4%/11.3% for the firm, whereas its 4 yr/5 yr profit CAGE is likely to be 13.7%/14.1%. The brokerage remains positive on HUL's ability to outgrow the market as well as its pricing power underpinned by distribution expansion, deepening direct reach and product innovation initiatives. It expects higher investment in A&P to support brand equity and counter rising competitive intensity. With overall demand looking buoyant, it sees HUL being a key beneficiary. With easing net material inflation, the margin profile is likely to continue to improve in FY24, said Nuvama.