UBS Favors D-Mart, Trent, Colgate Amid Forecasted FMCG Earnings Rebound in FY26
UBS has spotlighted select stocks in the Indian FMCG and retail sectors as top picks, anticipating a stronger earnings trajectory beginning FY26. Notable among the preferred names are Avenue Supermarts (D-Mart), Trent, and Colgate-Palmolive, signaling confidence in organized retail and premium consumer brands despite prevailing macro headwinds.
According to UBS, while earnings growth for India’s consumer sector is likely to remain slow in FY25, driven largely by lackluster rural consumption and price-led growth plateauing, a material rebound is expected in FY26. The firm projects sector earnings per share (EPS) growth to rise to 17% in FY26, up sharply from a subdued 10% in FY25.
UBS maintains a neutral view on the sector in the short term but underscores selective buying opportunities in anticipation of structural growth. The firm sees D-Mart and Trent as well-positioned in the organized retail space, citing strong execution, scale benefits, and exposure to premium customer segments. Colgate-Palmolive is highlighted for its margin resilience, steady volume growth in oral care, and increasing market share in key product segments.
Trent’s aggressive store expansion and sharp same-store sales growth position it as a key beneficiary of the shift towards branded apparel and organized retail. Similarly, Avenue Supermarts’ focus on value retail and operational efficiency enhances its medium-term outlook, even amid near-term demand softness.
On the other hand, UBS is cautious on companies reliant on rural India or lacking pricing power in a moderating inflation environment. The report suggests that pricing growth may taper off due to benign commodity costs, putting volume recovery at the center of performance revival. Brands with strong pricing power, sustained marketing investment, and diversified portfolios are expected to outperform.
As FMCG players navigate shifting consumption patterns and a potentially stronger demand landscape ahead, the sector is expected to witness a rotation toward earnings quality and structural growth enablers well into FY26.