Macquarie: Weaker Monsoon Risk, Favors Titan, Lenskart, Marico
By Market Desk
Macquarie flags weaker August-September monsoon risk, impacting rural demand. Analyst Avi Mehta favors Titan, Lenskart, Marico, cautioning on rural-focused stocks.
Macquarie has issued a detailed consumer sector note, with analyst Avi Mehta highlighting a weaker monsoon forecast for August and September by Skymet, posing a risk to India’s rural sentiment and consumption.
Despite this outlook, Macquarie is not broadly defensive on consumer stocks, instead favoring specific companies with ‘Outperform’ ratings.
Key Outperform Ratings
- Titan: ‘Outperform’ with a target price of Rs 5,600.
- Lenskart: ‘Outperform’ with a target price of Rs 675.
- Marico: ‘Outperform’ with a target price of Rs 965.
- Hindustan Unilever: Maintains ‘Outperform’ rating.
- Asian Paints: Identified as the preferred choice in the paints sector.
Conversely, Macquarie has expressed caution on several rural-focused names, assigning them ‘Underperform’ ratings amidst the monsoon concerns.
Rural-Focused Underperformers
- Britannia
- Pidilite Industries
- Berger Paints
- Page Industries
- Jubilant FoodWorks
The primary concern remains the potential impact of a weak late-season monsoon on crucial crop production and subsequent rural incomes across India.
However, the report notes a contained risk of sharp food inflation, attributed to healthy crop production from the last season and substantial government food buffers.
Monsoon’s Mixed Impact
A weaker monsoon extending into late September could offer a silver lining for some consumer businesses by potentially extending the pre-festive painting season, though overall sales remain tied to income levels.
The monsoon’s performance is thus creating a clear distinction among consumer stocks, with those possessing significant rural exposure facing heightened uncertainty.