India’s consumer sector is showing early signs of recovery, with demand trends improving gradually across most categories in 3QFY26. Aggregate sector performance remained healthy, with revenue and EBITDA growth of 17% and 15% year-on-year, respectively, supported by a low base and improving consumption sentiment. Even on a normalized basis (excluding high-growth discretionary segments), underlying growth trends indicate a steady, albeit uneven, recovery.

Consumption trends strengthened sequentially through the quarter after temporary disruptions in October due to GST-related channel adjustments. Food categories outperformed personal care, aided by favorable tax changes and resilient demand, while staples continued to demonstrate stability. Discretionary segments showed mixed trends—jewelry witnessed strong growth despite elevated gold prices, supported by festive demand, whereas segments like innerwear and quick service restaurants (QSR) saw gradual recovery with improving channel sentiment and footfalls. Paints remained an outlier, impacted by extended monsoons and a shorter festive season, though early signs of recovery emerged toward the latter part of the quarter.

A key positive for the sector has been the stability in raw material prices, particularly for staples, which supported gross margin expansion and operating leverage. Premiumization trends, especially in discretionary categories such as alcoholic beverages, continued to drive margin improvement. QSR players also reported sequential margin expansion, aided by better store-level economics and improving average daily sales. However, product mix challenges persisted in certain segments, highlighting uneven profitability recovery.

Cooling inflation, supportive government initiatives, and improving affordability are emerging as key catalysts for consumption recovery. Additionally, normalization in trade channels post GST adjustments and expectations of a strong summer season are likely to support demand momentum in the near term. Premiumization, formalization, and category shifts toward organized players continue to shape long-term sector dynamics.

While the sector is on a recovery path, the pace remains uneven across categories. Staples and food are expected to sustain steady growth, while discretionary segments may witness a sharper rebound as demand conditions normalize further. Input cost stability and operating leverage should continue to support margins. Overall, the medium-term outlook remains constructive, driven by improving macro conditions and structural consumption drivers, although near-term performance may vary across segments.

Titan Company: Buy| Target Rs 5000

Titan delivered a blockbuster quarter, reinforcing its leadership in the organized jewelry market through strong festive traction, compelling collections, impactful brand campaigns, and effective exchange schemes. Continued store expansion and scaling non-jewelry segments further strengthen its competitive moat and sustain growth momentum across categories. In 3QFY26, consolidated revenue rose 43% YoY, with standalone jewelry (ex-bullion) up 40%. Studded growth moderated, impacting mix, while EBIT margin contracted 60bp to 10.6% despite healthy 32% EBIT growth. Watches and eye care posted steady gains, reflecting broad-based demand resilience. We remain constructive, underpinned by Titan’s superior sourcing, studded strategy, youth focus, and reinvestment intensity, which preserve brand strength and pricing power. We model 23%/25%/27% CAGR in sales/EBITDA/APAT over FY25-28E.

Britannia Industries: Buy| Target Rs 7150

Britannia Industries reported a solid 3QFY26 performance, posting 9.5% YoY revenue growth despite GST-led disruptions in October, with momentum recovering to ~12% sales growth in Nov–Dec, driving 22% EBITDA growth and an 18% rise in PBT on strong biscuit and adjacent category traction. With 60–65% of its portfolio in INR5/INR10 LUP packs, Britannia is well positioned to benefit from the GST rate revision, supporting volume growth. Stable raw material costs and a sharper distribution focus further strengthen its competitive positioning. Looking ahead, earnings visibility remains strong, supported by improving consumption trends, distribution expansion, product innovation, and continued brand investments under the new CEO. We model a 12% revenue CAGR and 14% PAT CAGR over FY26–28E, indicating sustained growth momentum.
(The author is Siddhartha Khemka, Head of Research – Wealth Management, Motilal Oswal Financial Services)

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