Summary:

According to UBS, India’s consumer sector is poised for a significant comeback, with earnings expected to rise by 13% in FY26, following a muted 1% growth in FY25. This rebound is projected to be driven by income stimulus measures, corrected market valuations, and favourable base effects. Key policy catalysts include the potential implementation of the Eighth Pay Commission and tax cuts aimed at boosting demand and consumer purchasing power.

UBS also highlights a 35% decline in consumer sector valuations since October 2024, which enhances stock attractiveness despite subdued risk appetite. The sector’s unusual underperformance points to a strong cyclical recovery. With stabilising input costs, supportive base effects, and policydriven demand, the sector is forecast to achieve a 12.8% compound annual growth rate (CAGR) from FY25 to FY27, supported by structural tailwinds and an improved investment environment.

Source: IBEF

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