印度消费：26财年需求复苏-谁将从1.6万亿卢比的支出增长中受益？

As we exit FY25, Indian consumer’s overall health and the potential of demand uptick is akeenly debated topic in most of our investor meetings. In this note, we look at company results,management commentary and macro-economic/sector-specific data to form a view. We alsoquantify the potential impact of regulatory actions on consumer wallets.“Past was tough, Future looks positive” suggests the 4Q25 results & managementcommentary.Listed FMCG and QSR companies’ revenue growth has improved sequentiallythroughout FY25 (~5% in 1Q25 vs. ~9% in 4Q25 for FMCG and a movement from -ve to+SSSG for QSR firms). Management commentary, while broadly cautious, has also beenindicating demand green-shoots in specific categories and geographical pockets.Macro indicators are indicating a positive turn in consumer sentiment and demandenvironment.Overall, the CPI has softened to 3.2% in Apr’25 and the CPI-Food has droppedmaterially to 1.8% in Apr’25 vs. ~9% in Apr’24. A better-than average monsoon may help keepfood prices low and hence support discretionary spends for consumer wallets. The ConsumerSituation Index is inching up slowly, credit card spends are picking up materially, and we thinkconsumer credit growth has bottomed out and will improve from hereon.We estimate that income tax cuts and rate cuts will add ~INR 1.6 Tn/Year to consumerwallets.Income tax cuts should add ~INR 80 Bn/mth cash to consumer wallets. A ~100 bpscut in repo rate (50 bps done, we expect an additional 50 bps) may translate to ~INR 150Bn of EMI savings. This does not assume any leveraged impact. Towards the end of FY26,the transition to the new tax regime, which reduces impetus on contribution to govt smallsavings schemes, could also lead to incremental cash in hand. We expect this amount couldbe released towards investments or alternate savings options.Impact highest in middle of pyramid which form core consumption class for manycategories.Tax cuts are expected to be concentrated on approx. 7-10 Mn taxpayerswhile the interest rate cuts will impact EMI payments across ~115 Mn home, auto andMSME (individual) loans. The key beneficiary segment (especially relevant for organized retailspends) is in the Next-30% of the income pyramid since the Top-10% had relatively lowerfinancial stress and the Bottom-60% are not key contributors to the consumption class. Forthis relevant cohort, we estimate theimpact as +5% of wallet size. Given the spendingprofile of this class, we also expect theimpact to be most positive for organized retail.Within consumer wallets, discretionary spend areas like Food Service, Eating Out arelikely to see the biggest impact.Sector-specific impact of incremental wallet share shouldbe high where all (or many) of the following conditions apply (a) Price-elasticity of demand ishigh, i.e., consumers have had to cut back in the last few quarters due to lower wallet flexibility;(b) Demand is dynamic, i.e., consumers can increase/decrease usage easily; (c) Ticket Size issmall; and (d) Gratification is instant. We expect Food Services, Retail (Apparel, Beauty), andEntertainment, etc., to see the highest incremental benefit. There is one key risk to this impact- a portion of HHs could choose to deleverage the HH balance sheet. In this scenario, theimpact on consumption could be muted.www.bernsteinresearch.com BERNSTEIN TICKER TABLETickerRatingDMART.INOTRENT.INOABFRL.INUVMM.INUJUBI.INODEVYANI.INOSAPPHIRE.INMWESTLIFE.INUASIAXO - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage SuspendedVMM.IN estimate is Adjusted EPS; DMART.IN valuation is EBITDA CAGR; VMM.IN valuation is EV/EBIT (x); DMART.IN, TRENT.IN base year is 2025;Source: Bloomberg, Bernstein estimates and analysis.INVESTMENT IMPLICATIONSWe expect consumer demand to gradually recover throughput FY26. We think that companies targeting small, ticketdiscretionary consumer spend in urban areas are likely to see the most immediate benefit of this recovery.We maintain our Outperform rating on DMart, Trent, Jubilant and Devyani.INDIA EMERGING CONSUMER DETAILSFY25 REVIEW: PERFORMANCE IMPROVED THROUGH THE YEARAcross FMCG firms, the revenue growth performance improved throughout the year FY25. H1F25 generally had difficultdemand conditions continuing from H2F24 leading to average revenue growth of just ~5% across key FMCG firms in 1Q25(even lower if we consider only organic growth for Tata Consumer products). However, this growth recovered during H2, with4Q25 reporting ~9% average revenue growth (Exhibit 1). This improvement in revenue growth was also accompanied bypositive commentary around broader demand environment and conditions (Exhibit 3). Many companies reported green shoots indemand and also indicate a hope for a better FY26 demand given better macro-economic indicators.Note: HUL, Nestle, Tata Consumer, Britannia, Godrej Consumer Products, Dabur, Marico are not covered by Bernstein.The performance and commentary indicated similar trends from QSR firms as well.