FY26 OUTLOOK ON CONSUMPTION FY26 outlook – Defensives are back Urban slowdown shall persist till Q1FY26, and urban demand shall start reviving Q2FY26 onwards. We expect this revival on the back of tax cuts in the union budget and potential rate cuts by the RBI (one cut already taken). Gradual recovery in rural demand to continue due to freebies and good crop, among others. Some parts of food inflation have started easing off, which would lead to overall revival. Margins of companies more vulnerable to inflation in key raw materials—palm oil, coffee, tea, etc—such as Godrej Consumer, Tata Consumer and Bikaji to remain under pressure till at least Q1FY26. Price hikes were taken in Q4CY24 with further rounds of hikes expected in H1CY25. In these inflationary times, we expect larger players to continue to gain market shares from regional/start-ups. AlcoBev companies to see strong growth in Andhra and Telangana (with respective disputes getting resolved). Cola wars to intensify with Campa winning IPL sponsorships and launching new energy drinks. To summarise, Defensives are back in flavour. We expect CY25 to be better after a muted CY24.