Potential income stimulus over the next few years has been identified as one of the key growth drivers, the report mentions
Displaying signs of recovery, India’s consumer sector is looking ready to rebound in the current financial year (FY26). The earnings in the consumer sector are expected to grow by nearly 13 per cent in FY26, as per a report.
After underperforming in recent years, the recovery is expected to be driven by improving earnings, income support measures and more attractive stock valuations, according to a report by UBS, as highlighted in the media reports.
Potential income stimulus over the next few years has been identified as one of the key growth drivers, with the possibility of lower taxes and implementation of the Eighth Pay Commission boosting consumers’ purchasing power. Aiding a longer phase of earnings growth, these could lead to a recovery in demand across multiple categories in the consumer sector.
The sector’s valuations have corrected by as much as 35 per cent since October 2024, as per the report. In a market that is likely to show low risk appetite, this makes consumers stocks more appealing to the investors.
The report has projected a 13 per cent uptick in earnings for the current financial year. In addition, it expects an average annual growth rate (CAGR) of 12.8 per cent between FY25 and FY27. Providing boost to earnings recovery, the input cost cycle and base effects are likely to turn positive in FY26.
