Consumer Sector Faces Inflationary Challenges; Marico and Radico Khaitan Stand Out
Motilal Oswal sector of the week: Consumer; Marico, Radico Khaitan top bets
Business Standard
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The consumer sector is experiencing cautious growth due to rising inflation, particularly from crude oil prices, which have surged nearly 70% year-on-year as of April 2026. Marico and Radico Khaitan are highlighted as top investment picks, with Marico targeting ₹900 and Radico Khaitan aiming for ₹3,850 amid evolving market conditions.
- 01Consumer sector's growth is hindered by inflation pressures, particularly from crude oil prices.
- 02Marico expects double-digit operating profit growth in Q4 FY26, driven by strong demand.
- 03Radico Khaitan benefits from a shift towards premium products and a favorable excise policy in Karnataka.
- 04Both companies are adapting pricing strategies to manage cost pressures and protect demand.
- 05Market corrections have already accounted for some margin pressures, but future crude prices will be crucial.
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The consumer sector's outlook has turned cautious as inflationary pressures resurface, particularly with crude oil prices rising nearly 70% year-on-year in April 2026. This situation poses challenges for sustaining demand while protecting profitability. Historical trends indicate that moderate inflation can allow market leaders to consolidate their positions, but the current environment resembles the 2022-2023 phase, marked by increased competition and market fragmentation. Companies are implementing selective price hikes to mitigate cost pressures, particularly if crude prices exceed $85 per barrel. Marico, with a target price of ₹900, reported high single-digit volume growth in its India business, driven by strong demand in various product categories. Meanwhile, Radico Khaitan, targeting ₹3,850, is capitalizing on premiumization trends and a favorable excise policy in Karnataka, which is expected to enhance its earnings further. Both companies' future performance will heavily depend on their ability to navigate the inflationary landscape and manage pricing effectively.
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The inflationary environment may lead to higher consumer prices, affecting household budgets and spending patterns. Companies like Marico and Radico Khaitan are adjusting their pricing strategies to maintain demand, which could influence consumer purchasing behavior.
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