Defensive stocks with the stability and growth to keep them on Nuvama’s radar.
Overview: Investors are preferring defensive FMCG and QSR stocks for stability and growth, highlighting Nestle, Britannia, Marico, HUL, Colgate and ITC, while Jubilant FoodWorks and Burger King benefit from strong brand equity, expansion and operational resilience.
Investors are increasingly turning to defensive stocks in the FMCG and QSR sectors to balance stability and growth. Companies like Nestle, Britannia, Marico, HUL, Colgate and ITC offer resilient business models, strong brand equity and consistent cash flows, while QSR players like Jubilant FoodWorks and Burger King benefit from expansion, operational efficiency and customer loyalty. This focus reflects a preference for predictable returns and long-term value creation amid market uncertainty.
Prefer Nestle, Britannia & Marico over United Spirits
Preferred by Nuvama Institutional Equities nestleBritannia and Marico have stronger business foundations and more predictable growth profiles than United Spirits.
Nestle has a diversified portfolio of fast moving consumer goods (FMCG), is able to pass on price increases and has a consistent pattern of continued penetration in both urban and rural areas.
Britannia has a dominant market position in the bakery sector, has significant brand equity and is focused on selling high-margin products. Therefore, the company is seeing steady revenue and margin growth.
Like Britannia, Marico has ample opportunities for sustainable growth and cash flow visibility as it operates across a variety of categories including personal care and cooking oils, sells through strong brands, and has a strong focus on innovation and rural expansion.
In contrast, United Spirits continues to struggle with government regulatory pressures, high debt levels, and increasing margin volatility in the alcohol industry, making this investment slightly riskier. Overall, Nuvama believes that Nestle, Britannia and Marico will provide greater levels of stability, revenue predictability and long-term value creation in the consumer segment.
restaurant brand deals
Restaurant Brands Asia Limited’s proposed acquisition by Inspira Global is a positive development for the company. This is because we are bringing in well-capitalized, India-focused promoters with strong operational experience in the QSR space.
The transaction ensures a clean promoter transition with the complete exit of Everstone-backed QSR Asia, while strengthening the RBA’s balance sheet through a significant primary capital infusion through equity and warrants.
The acquisition price is Rs. 70 per share (representing a premium to the market price per share), the transaction reflects the RBA’s confidence in its long-term growth potential. Planned injection of ~Rs. The $150 billion provides financial flexibility to accelerate store expansion, improve unit economics and invest in brand building, technology and supply chain efficiencies while maintaining continuity of existing management teams and operating structures.
Burger King’s positioning
Burger King’s value-driven, mass-premium positioning in India underpins its growth story through competitive pricing, localized menus, and strong digital and delivery capabilities that have driven expansion to over 575 stores.
Key monitors going forward include same-store sales growth, momentum in the value platform, restaurant-level margin improvement, and systematic expansion across metros and tier 2/3 cities. Inspira Global’s QSR operational expertise and capital discipline are expected to strengthen Burger King India’s long-term value creation prospects by increasing profitability while sustaining growth.
Jubilant FoodWorks is your top choice for QSR
With QSR stocks in India underperforming over the past few months, Nuvama institutional equity ED Abneesh Roy says Jubilant FoodWorks (Jubilant), which has the strongest brand equity compared to other competitors in the same segment, is best positioned to succeed. Additionally, unlike other large fast food brands, Titan is a stronger investment than all the QSRs in the retail space combined.
Jubilant’s success is directly linked to its strong position as the leader in the pizza category in India, with Domino’s brand equity of unparalleled scale within the pizza category.
The excellent brand reputation built by the Domino’s brand gives Jubilant a significant advantage over its competitors during this time when demand for quick service restaurants and their products continues to be depressed, maintaining the ability to continue to provide consumers with superior quality and low prices at all times during economic downturns.
HUL and Colgate currently enjoy attractive valuations.
The valuation multiples of Hindustan Unilever (HUL) and Colgate-Palmolive are attractive for long-term investors. HUL is a strong brand and operates in the diverse Fast-Moving Consumer Goods (FMCG) space and has established a strong presence in both rural and urban areas.
Colgate, a leading supplier of oral care products, has established itself as a dominant player in the market and enjoys significant pricing power, strong brand equity, and stable demand for its products, generating consistent revenues and profits.
ITC Corporation
ITC’s current valuation multiple is now perceived as reasonable due to its well-known brand strength, stable annual cash flows over the long term, and defensive segmentation between FMCG, tobacco and hotels. The company is expected to continue raising prices over the next two to three years, even though sales are gradually declining.
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