UBS says ‘time to buy’ consumer stocks; HUL, ITC, Trent among top picks

The dark clouds hovering over India’s consumer sector may finally be clearing, with global brokerage UBS noting that a "Goldilocks scenario is in the making." UBS expects a robust 13 per cent earnings growth in FY26 after a relatively muted FY25 performance.

The brokerage sees a mix of macro and policy-led triggers such as income stimulus from tax cuts and the potential rollout of the Eighth Pay Commission supporting a broad-based consumption revival. “This could trigger a revival in demand and support an extended earnings growth phase,” UBS said in a recent note.

Valuations corrected up to 35 per cent; select defensives turn attractive

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UBS highlighted that consumer stock valuations have corrected significantly by as much as 35 per cent since October 2023 making several names attractive again. “The consumer sector offers a degree of defensiveness in a market that continues to exhibit low risk tolerance, while also standing to benefit if risk appetite makes a comeback,” it added.

Turnaround stories: UBS turns bullish on HUL, GCPL, ITC

UBS has upgraded Hindustan Unilever (HUL) to 'Buy' from 'Neutral', with the target price hiked to Rs 2,800 from Rs 2,700. Godrej Consumer Products (GCPL) has also been rated ‘Buy’, with a raised target of Rs 1,500 from Rs 1,450. ITC, which has underperformed on tax fears, has been upgraded to 'Buy' with the target price increased to Rs 490 from Rs 470.

Retail resilience: DMart, Trent get a thumbs up

UBS prefers DMart and Trent in the value retail segment. While DMart retains a ‘Buy’ call, its price target has been cut to Rs 5,200 from Rs 5,250. In contrast, Trent has been upgraded to ‘Buy’ from ‘Neutral’, and the target raised sharply to Rs 6,200 from Rs 4,650.

Inflection point stocks: Britannia, Colgate see upgrades

Colgate-Palmolive has been upgraded to 'Buy' from 'Sell' with a revised target of Rs 3,100 from Rs 2,240, citing visible earnings recovery. Britannia retains its ‘Buy’ call with a higher target of Rs 6,350 from Rs 6,000.

Downgrades: UBS turns cautious on Asian Paints, Dabur, Jubilant

UBS is now bearish on Asian Paints, citing disruption-related uncertainties, cutting its rating to 'Sell' from 'Buy' and slashing the target to Rs 2,100 from Rs 3,650. Dabur has been downgraded to ‘Sell’ with a revised target of Rs 470 from Rs 600, citing portfolio-specific concerns. Jubilant Foodworks, viewed earlier as a contrarian bet, has also been downgraded to ‘Sell’ with the target reduced to Rs 600 from Rs 615.