In October 2016 Top Picks report, we had shown faith in the India’s consumption
story. The ongoing earning season confirms our bias as companies in the
consumption sector have reported decent set of numbers so far. Most notably,
companies in automobile sector have emerged as beneficiary of the ongoing
recovery in the consumer demand. The management commentary of following the
results indicated that some green shots of recovery are seen in rural market and
more growth will be visible in the next few quarters. We also observe improving
sales and operating margins of some companies from food processing, pesticide,
paint, and plastic industries. As the consumer demand strengthens, corporate
earnings are also expected to pick-up.
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