FMCG Stocks Poised for Growth Amid Tariff-Driven Market Volatility
Amid ongoing tariff pressures and volatile input costs, select fast-moving consumer goods (FMCG) companies in India are showing promising upside potential, offering tactical opportunities for investors and market watchers alike. Brokerage firm Motilal Oswal has identified six FMCG stocks with upward potential of up to 32%, highlighting resilience in companies that effectively manage cost pressures and maintain demand momentum.
Margin Gains and Strategic Pricing Drive Optimism
The FMCG sector continues to face mixed signals. On one hand, rural demand remains sluggish, and competition in packaged foods intensifies. On the other, softening raw material prices and improved gross margins have provided a cushion. Many companies have leveraged price hikes and cost rationalisation measures, particularly in discretionary categories like paints, personal care, and home care, resulting in noticeable earnings upgrades over recent quarters.
In this environment, tactical positioning is key. Motilal Oswal’s analysis suggests companies with pricing power and margin recovery stand to benefit the most in the short to medium term.
Top FMCG Picks and Their Potential
Among the six stocks highlighted, Marico leads with a projected upside of 32%, driven by expected demand revival in rural markets and stable input costs. Godrej Consumer Products offers a 23% potential upside as restructuring efforts bear fruit and international business performance stabilises.
Hindustan Unilever (HUL), while a more conservative play, still presents a 12% potential upside on the back of gradual recovery in volume growth and premiumisation across categories. Dabur and Nestlé India are also favoured, with anticipated gains of 20% and 11%, respectively, supported by product innovation and resilient urban consumption trends.
Meanwhile, Tata Consumer Products is estimated to have a 17% upside, driven by momentum in its food and beverage portfolio and synergies from recent acquisitions.
Sector Outlook Hinges on Rural Recovery
Despite positive gross margin trends, full demand recovery continues to hinge on rural revival, which remains below expectations. However, household penetration remains high