Nuvama's Abneesh Roy sees buying opportunity in HUL and Colgate after FMCG sell-off

The recent correction in large consumer stocks has created an attractive buying opportunity, with Hindustan Unilever (HUL) and Colgate-Palmolive (India) emerging as Nuvama Institutional Equities' top picks, according to Abneesh Roy, Executive Director at Nuvama Institutional Equities.

Speaking to CNBC-TV18, Roy said the sharp post-results declines in some fast-moving consumer goods (FMCG) stocks do not reflect a deterioration in fundamentals. Instead, he attributed the volatility to F&O positioning and elevated market expectations, adding that investors should use such corrections to build positions.

"Yes, I think that is opportunity to add such stocks," Roy said. "There was the F&O pre-positioning in such cases, in my view, and there is also sometimes some irrational expectations."



Roy divided his FMCG coverage into three broad investment themes. The first is "compounding stories" such as Nestle India, Pidilite Industries, Radico Khaitan and Marico. The second is companies offering valuation comfort along with an earnings recovery, where HUL and Colgate are his preferred picks. The third is the liquor sector, which he believes is entering a favourable phase because of policy reforms.

Explaining why he prefers HUL and Colgate, Roy cited four key factors. He expects foreign institutional investors to increase allocations to large-cap Indian companies following the recent correction in Korea and Taiwan.

He also believes easing inflation will help market leaders gain share and improve profitability. Attractive valuations further strengthen the investment case, while concerns around El Nino have become overstated as agriculture now contributes a much smaller share of rural incomes than before.

"I will say that HUL and Colgate will come back to glory," Roy said.

Roy is also optimistic about the paint sector, saying the industry's slowdown is behind it. He expects paint companies to deliver 15-18% sales growth in both the April-June quarter of 2026 (Q1FY27) and the July-September quarter of 2026 (Q2FY27) quarters as demand improves across the industry.

While he likes the entire sector, Roy believes Asian Paints is best placed to emerge stronger. According to him, the market leader is likely to gain share from smaller regional players that are struggling with volatile raw material costs, while Berger Paints

should benefit from a gradual economic revival in West Bengal over the next few years.

Among urban consumption themes, Roy prefers liquor companies over hospitality stocks. He believes reforms in Tamil Nadu and Karnataka, along with benefits from the UK-India free trade agreement (FTA), could provide a meaningful boost to the sector. His preferred names are United Spirits, Radico Khaitan and Allied Blenders.

Roy is also constructive on ITC despite near-term challenges. He expects cigarette volumes to remain under pressure for a few more quarters but believes the worst is already reflected in the stock price. With valuations looking attractive and a dividend yield of around 5%, he sees ITC as a stock for investors with a one-to-two-year investment horizon.

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On quick commerce, Roy does not expect competition to ease even if questions remain over Zepto's initial public offering (IPO) valuation. He said aggressive expansion by Amazon and Flipkart means the battle for market share will continue, benefiting FMCG companies by expanding online distribution channels.

Roy believes India's large consumer companies are entering a more favourable phase. Easing inflation, improving rural demand, attractive valuations and consolidation in the consumer space, he argues, should allow market leaders to outperform over the next few years.



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