March heat boosts Varun Beverages; consumer & retail sectors face mixed trends, says Nuvama

The March quarter has seen temperatures 3-4 degrees higher than normal, benefiting companies like Varun Beverages, which is expected to report 12% volume growth—a significant jump from the previous quarters. Abneesh Roy, Executive Director at Nuvama Institutional Equities, stated that rising demand for cold beverages amid an early summer has provided a boost to the company.

In the alcoholic beverages sector, growth remains intact, though United Breweries may see a temporary dip due to Telangana's 12-day liquor sales ban. However, Roy remains positive about the sector's long-term prospects.

The consumer sector is witnessing varied performances across categories. While brands like Emami and Marico are showing steady growth—Marico’s premium and digital-first brands are expanding at a 25-30% growth rate—the staples sector continues to face headwinds.

Companies such as HUL and Colgate are struggling with weak volume growth due to inflation in raw materials like tea, palm oil, and copra, along with rising competition from Dabur in the oral care space. Nestlé, however, is showing early signs of recovery.

Also Read: A 22% correction in Varun Beverages shares in 2025 is a buying opportunity, DAM Capital says

Retail stocks like Trent and DMart saw sharp corrections earlier this year but have started rebounding. Roy stated that Trent’s store expansion concerns tend to ease in March, when approvals and regulatory clearances come through, leading to a surge in store openings. "We remain quite positive on Trent," he said, adding that DMart is also expanding its store network, although rising discounts from quick-commerce platforms could pressure margins.

The quick-service restaurant (QSR) industry is expected to recover faster than food aggregators like Zomato and Swiggy. Jubilant FoodWorks (Domino’s) is focusing on value-driven offerings and building its delivery fleet, reducing dependence on aggregators. Roy believes this move, along with expansion into new categories like chicken-based products, will help the company gain market share.

In the paints sector, Berger Paints is likely to outperform Asian Paints due to its stronger presence in rural and eastern India, where demand remains more stable. Roy expects Berger to see 9% volume growth, while Asian Paints may achieve only 3-4%. Pidilite continues to expand its product portfolio, with increased focus on electric vehicles (EVs) and mobile manufacturing adhesives, making it a strong long-term play.

Also Read: FMCG revenue growth to inch up 6-8% in FY26 on gradual demand revival: Crisil

Quick-commerce player Zepto has been aggressively discounting products to capture market share, leading to margin pressure for grocery retailers like DMart. This pricing strategy is intensifying competition, making profitability a challenge for traditional grocery chains.

A key leadership change at Hindustan Unilever (HUL) has also caught attention. The company appointed Rajneet Kohli, formerly with Britannia, as the Executive Director of its Foods division. This is an unusual move, as HUL typically promotes leaders from within. "Hiring from outside brings a fresh perspective," Roy said, adding that Kohli’s experience at Domino’s and Britannia could help HUL navigate challenges in its food and refreshment segment.

Also Read: HUL appoints Rajneet Kohli as executive director of foods business

For the entire interview, watch the accompanying video

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