The growth primarily stems from jewellery (gold price-led) and new-age businesses (customer acquisition push). In other sectors, demand continues to remain subdued
While value continues to emerge in pockets, a report has stated that discretionary categories excluding new age, jewellery continue to witness moderating growth. India’s consumer discretionary sector is expected to post around 20 per cent year-on-year revenue growth in the third quarter of FY26, as per HSIE research.
Q3 performance is anticipated to exhibit significant divergence across categories. The jewellery segment is expected to maintain healthy growth, driven by gold prices, though buyer growth is likely to remain flat. In apparel sector (excluding Trent), players are likely to report around 9 per cent YoY growth. Same-store-sales-growth (SSSG) remains in the low-single digits across apparel retailers, growth likely supported by store expansion.
The report added that demand in footwear remains sluggish too and paint companies continue to face subdued demand and fierce competition, although Asian Paints is anticipated to outperform its rivals. New-age businesses are expected to sustain strong YoY growth as they continue to prioritise customer acquisition, it noted.
“Our consumer discretionary coverage universe (ex-Eternal) is expected to deliver around 20 per cent YoY revenue growth in Q3. The growth primarily stems from jewellery (gold price-led) and new-age businesses (customer acquisition push). In other sectors, demand continues to remain subdued,” the report pointed out.
The report added that margins for its discretionary space (excluding Eternal) are expected to remain largely stable at 10 per cent. In jewellery (ex-bullion), the report has penciled in around 10 basis points margin contraction to 9.3 per cent due to unfavourable mix.
In paints, while favourable raw material prices should expand gross margins, but intense competition will likely offset these gains due to elevated operating costs. Footwear companies (excluding Metro) are likely to see margin contractions due to negative operating leverage, while the report expects Metro to deliver around 20 bps margin expansion.
“In apparel, we have built in around 60bps margin expansion (on a low base). In food delivery, we expect margins to improve due to higher platform fees in Q3. In QC, competition intensity remains high. Overall, we build in an ebitda growth of around 21 per cent YoY for our universe,” the report highlighted.
