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A report by Nomura revealed a stark difference in trends between staples and discretionary stocks for the December quarter of FY23.

Staples saw revenue and EBITDA growth of 12% and 9% respectively on a YoY basis, while discretionary sales were only up 10%, and EBITDA declined 13%.

The slowdown was visible across subcategories such as QSRs, footwear and paints, with apparel/inners seeing sharp declines. 

Volumes of staples remained low to mid-single digit growth due to linear price increases and tepid rural demand.

Nomura prefers companies that have superior growth, investments in distribution/digitization/R&D capabilities, and structural tailwinds. 

Its top picks are Britannia, Godrej Consumer, ITC and HUL.

Demand in the September quarter was better than the December quarter.

There was a noticeable slowdown in the staples sector but an intensification in the discretionary sector.

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consumer sector Q3 earnings. 

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Consumer sector Q3 earnings: A look at top hits and misses

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Consumer sector Q3 earnings: A look at top hits and misses

As per the report, while staples' revenue growth was in line with its historical average, discretionary revenue growth was materially lower.

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