Downgrades

Resilient cigarette volumes, steady FMCG growth, and expected margin recovery from easing input costs underpin our positive outlook.

United Spirits (UNSP) delivered a strong performance in 2QFY26, with revenue rising 12% YoY (beat) and total volumes up 8% (vs. est. 6%).

LT Foods (LTFOODS) reported a strong quarter with revenue growth of 31% in 2QFY26, led by 36% YoY growth in Basmati and Other Specialty Rice (branded business volume up 26% YoY).

With an upside potential of 15% from the CMP, we maintain our BUY rating on the stock.

Management remains optimistic about sustaining growth momentum, supported by robust international performance and a recovery in domestic demand as weather conditions normalize.

With a 14% upside potential from the CMP, we maintain our BUY rating on the stock.

3QCY25 was a muted quarter for Varun Beverages (VBL) as its revenue grew only ~2% YoY due to prolonged monsoon across India.

International markets grew 15.1% YoY, led by 16.1% YoY growth in South Africa, on strong currency movement and commissioning of new can line in Durban. EBITDA grew 0.4% YoY to Rs. 1,999cr and margin expanded 75bps YoY to 27.9%, on newer, high-efficiency lines and strong currency in international operations. The company delivered a resilient performance driven by robust execution, *over or under performance to benchmark index expanded distribution and operational ramp-up of new plants. The management is focused on strategic international expansion, backward integration, snack...

Godrej Agrovet (GOAGRO) reported a strong operating performance (EBIT up 23.5% YoY) in 1QFY26, primarily due to a sharp 3.6x/34.2% YoY growth in palm oil/crop protection (CP) EBIT, while Animal Feed (AF)/Dairy/ Poultry EBIT dipped ~17%/76%/76% YoY.

ITC posted a mixed performance in Q1FY26, with strong revenue growth driven by cigarette and agri business, while margins declined sharply and missed estimates.

With an upside potential of 18% from the CMP, we maintain our BUY rating on the stock.

ITC sustained healthy performance in core segments in a tepid consumption environment, though margins remained under pressure.

With a 15% upside potential from the CMP, we maintain our BUY rating on the stock.

Despite rising competitive intensity and lower volumes, Varun Beverages (VBL) delivered better-than-expected Q2CY25 profitability due to better control on overheads and favourable currency movement in the Africa market.

2QCY25 was a muted quarter for Varun Beverages (VBL) as its revenue declined 2% YoY due to the early onset of monsoon in the peak summer months of India.

Tata Consumer Products (TATACONS) reported 10% revenue growth in 1QFY26, while EBIT declined 12% YoY. EBIT was affected by higher input costs in the Branded business (India/international business EBIT down 11%/12% YoY) and declining coffee prices in the non-branded business (EBIT down 33%).

Market share gains, the lower base (owing to elections) and sustained premiumisation drove an 11% rise in United Breweries’ volumes in Q1 (above the Street’s 5-7% estimate).

ITC’s net revenues (including other operating income) grew by 9.6% y-o-y to Rs. 17,248 crore driven by 6% y-o-y growth in the cigarette business’s net revenues and a 17.7% y-o-y growth in the agribusiness’s revenue.