September quarter set for GST hiccups, analysts back HUL, Britannia, Marico

India’s consumer sector faces a challenging September quarter (Q2FY26), as companies deal with short-term headwinds from GST transition, erratic monsoons, and rising input costs, analysts said. 

 

Domestic brokerage firm Nuvama Institutional Equities (Nuvama) expects volume and revenue growth to remain moderate this quarter, with a rebound likely from November as pricing stabilises and deferred demand returns. 

 

Top picks for the quarter include staples names such as Bikaji Foods, Britannia, Nestle, Hindustan Unilever (HUL), and Tata Consumer Products, while United Spirits and Asian Paints feature among discretionary favourites. These companies are expected to outperform peers due to resilient portfolios, pricing power, and diversified exposure.

 

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GST transition weighs on volumes, margins

 

Q2FY26 is marked by disruptions from GST 2.0 reforms, analysts noted. While most companies have fully passed on the initial GST benefit to consumers, the transition has led to delayed purchases and cautious trade stocking, potentially impacting volumes and margins by 2-3 per cent. Inverted duty structures pose an additional challenge, particularly for personal and oral care companies like Colgate and Emami, where a larger share of input tax credits comes from non-refundable services. Contrastingly, food-focused FMCG firms benefit from refundable goods GST, partially offsetting the headwind.

 

HUL, under new MD Priya Nair, reported that revenue growth is likely to be flat to low single-digit in Q2FY26. The company highlighted the short-term nature of this disruption, expecting recovery from November as price adjustments stabilise and channel inventory clears. Other companies, including Britannia and Nestle, have taken aggressive measures, combining price cuts and grammage additions to ensure benefits are passed to end consumers, supporting demand.  CATCH STOCK MARKET LIVE UPDATES TODAY

Weather impacts summer portfolios

 

Heavy rains in Q2FY26 adversely affected seasonal categories such as carbonated drinks, ready-to-drink juices, beer, ice creams, and hair/skin summer care products. Varun Beverages, Emami, United Breweries, and Dabur are expected to face near-term revenue pressure due to these perishable categories, while decorative paint demand has been deferred. 

 

Analysts expect pent-up demand to rebound in the second half of financial year 2026 (H2FY26), supported by festival season and improved consumer confidence.

 

Winter portfolio may benefit from harsh season

 

Going forward, forecasts suggest a potentially harsh winter (December 2025-February 2026) due to a likely La Niña event, which could drive demand for immunity and skin care products. HUL, Dabur, and Emami stand to gain from this seasonal tailwind, while carbonated drinks and juices may face pressure. Q3FY26 growth for winter portfolios could see a double-digit boost versus last year’s mild winter base.  ALSO READ | Brokerages mixed on Tata Motors post analyst meet; key takeaways here 

Top-tier, Mid-tier, and Laggards

 

Analysts classify top-tier performers in Q2FY26 as Bikaji Foods, Marico, Tata Consumer, Britannia, Pidilite, United Spirits, and CCL Products, expected to lead in revenue, volume, and Ebitda growth. Mid-tier names include Nestle, HUL, ITC, Dabur, Asian Paints, Berger Paints, Bajaj Consumer, and AWL Agri Business, while laggards include Emami, Colgate, United Breweries, Varun Beverages, Godrej Consumer, and Indigo Paints.

 

Revenue and volume growth across the coverage universe is projected at 5 per cent and 2 per cent Y-o-Y, respectively, with Ebitda remaining largely flat. Strong performers such as Marico, Bikaji Foods, and Britannia benefit from resilient demand, while Emami and United Breweries are likely to see softer numbers due to weather-related and perishable category impacts, analysts highlighted.

 

Input costs remain a focus. Palm oil, up 16 per cent from May 2025 lows, could pressure margins for snacks and packaged food companies like Bikaji, Britannia, Nestle, and Gopal Snacks. Coffee remains elevated, supporting Tata Consumer’s plantation business, while tea prices have softened, aiding HUL and Tata Consumer margins. Political unrest in Nepal has posed minor operational disruptions but is normalising, limiting longer-term impact.

 

Policy support eases transition

 

The government has provided flexibility on GST-related issues, including voluntary restickering, extended use of old packaging until March 31, 2026, and optional advertisement of revised MRPs. Liquor policy reforms in Delhi, such as lowering the beer drinking age and potential return of private outlets, could provide additional growth avenues for alcohol beverage players.

 

That said, analysts believe Q2FY26 is expected to be a transitional quarter for India’s consumer sector. Short-term GST and weather-related challenges are likely to weigh on volumes and margins, but the resilience of top-tier companies, supportive government policies, and a rebound in seasonal demand from November provide optimism for H2FY26. 

 

Investors, according to analysts at Nuvama, may focus on diversified and portfolio-strong names such as HUL, Britannia, Marico, and Tata Consumer as key bets during this transitional phase.