Nomura's latest consumer-sector screen has put a fresh spotlight on India's discretionary and household staples names, with Titan, Lenskart and Dabur among 17 stocks it now rates Buy. The brokerage's call is notable not merely for the breadth of the list, but for the confidence embedded in its earnings assumptions: it sees average EBITDA growth of 13.8% year on year for the basket, a pace that implies demand strength is likely to outlast near-term cost pressures.
The recommendation arrives at a time when consumer companies are navigating a more complicated operating backdrop. Inventory costs have been rising, squeezing gross margins and forcing management teams to balance pricing discipline against the risk of slowing volumes. In such an environment, analysts typically become more selective, preferring companies with strong brand power, pricing flexibility and distribution reach. Nomura's stance suggests it believes those advantages are concentrated in a set of businesses that can still convert revenue growth into profit expansion.
Demand Holds Firm
The central thesis behind the call is that India's consumer story remains intact despite inflationary friction in the supply chain. For many listed consumer firms, the key question is not whether demand exists, but whether it can be monetised efficiently enough to protect earnings. Nomura's forecast indicates that it expects a combination of resilient consumption, operating leverage and product mix improvement to offset the drag from higher inventory costs.
That matters because consumer stocks often trade on expectations as much as on current performance. When margins are under pressure, valuations can compress quickly if investors conclude that earnings growth is peaking. By contrast, a forecast of double-digit EBITDA growth across a broad set of names can re-rate sentiment, especially if the market had been pricing in a softer cycle. The brokerage's target prices, while not detailed in the available information, are described as implying meaningful upside, which suggests the market may still be underestimating the sector's earnings power.
Titan is likely to attract the most attention in the list, given its status as a premium consumer brand with strong franchise value. Lenskart, meanwhile, represents a newer-age retail and eyewear consumption theme, while Dabur offers exposure to household and personal care demand. The mix indicates Nomura is not betting on a single sub-sector, but on a broader consumer recovery and the ability of select companies to defend margins through scale and brand strength.
Margin Pressure, Selective Upside
The presence of inventory cost inflation in the same narrative as Buy ratings is important. It signals that Nomura is not ignoring the risks. Instead, it appears to be distinguishing between companies that can absorb cost shocks and those that cannot. In consumer sectors, this distinction often comes down to procurement efficiency, channel management, product innovation and the ability to pass on costs without damaging demand.
For investors, the message is less about chasing the entire sector and more about evaluating individual holdings against a changing earnings backdrop. A broad consumer rally is not guaranteed, and not every company on the list will deliver the same return profile. Some may benefit from premiumisation, others from rural recovery, and some from distribution expansion or category leadership. The common thread is that Nomura sees enough fundamental support to justify a constructive stance.
The call also arrives as portfolio managers continue to reassess where growth can be found in Indian equities. Consumer stocks have historically been viewed as defensive, but in periods of improving demand they can also become growth vehicles. If Nomura's EBITDA projections prove accurate, the sector could regain investor favour after a stretch in which margin concerns and valuation fatigue weighed on sentiment.
What Investors Should Watch
The immediate market reaction will likely hinge on whether investors believe the earnings upgrades are durable. Key variables include raw material trends, inventory normalisation, pricing power and the pace of urban and rural demand recovery. Any sustained improvement in these metrics would strengthen the case for the brokerage's target prices.
At the same time, the list underscores the importance of selectivity. Consumer stocks can look expensive when growth slows, but they can also compound sharply when earnings surprise on the upside. Nomura's 17-stock Buy basket suggests the latter is still possible, provided companies can translate demand into profit growth faster than costs erode margins.
For now, the brokerage's message is clear: India's consumer sector is not uniformly under pressure, and several names still offer a compelling combination of growth visibility and valuation upside. Investors holding these stocks may want to examine whether their positions align with the earnings trajectory Nomura now expects, especially as the market digests the implications of stronger-than-anticipated EBITDA growth across the group.