Market Brief: High-Conviction FMCG and Retail Picks The FMCG and retail sectors are entering a significant recovery phase in 2026, supported by robust quarterly earnings and a shifting macroeconomic landscape. Recent data indicates a steady consumption rebound, with urban markets showing resilience and rural demand beginning to stabilize after a period of volatility. Axis Direct has identified four high-conviction stocks—Nestle India, Britannia, DOMS Industries, and V-Mart Retail—with projected upsides of up to 32%. This optimistic outlook is fueled by cooling inflation, strategic margin expansions, and the structural shift from unorganized to organized retail across India. Nestle India delivered a standout performance for the quarter ending December 2025. The company reported its highest-ever quarterly turnover of 5,643 crore, marking an 18.5% year-on-year revenue growth. Net profit surged 46% to reach 1,018 crore. This growth was largely volume-led, supported by aggressive brand building and a 42% increase in advertising spend. Analysts have raised price targets to as high as 1,450, citing strong momentum in the confectionery and beverage segments. Britannia Industries continues to demonstrate operational efficiency despite cost pressures in raw materials like palm oil and cocoa. The company reported a 9.5% revenue growth in the latest quarter, with a profit after tax of 680 crore. Management is focusing on a "start-up mentality" to drive innovation, particularly in the e-commerce and adjacency product channels. Current market estimates suggest the stock remains a steady pick with a target range between 5,130 and 5,650. DOMS Industries has emerged as a leader in the stationery segment, capturing nearly 30% of the market for core products like pencils. The company reported a 25.8% year-on-year revenue increase to 567 crore in its latest results. Net profit grew by 8.8%, and the company maintains a strong zero-debt position. Recent technical upgrades and institutional buying have boosted investor confidence, with the stock stabilizing around the 2,300–2,600 level as it scales its manufacturing capacity. V-Mart Retail is positioned as a primary beneficiary of rising aspirational spending in Tier-2 and Tier-3 towns. While the company revised its revenue growth forecast slightly to 15–18% following a subdued festive season, its EBITDA margins showed a significant improvement of 200 basis points, reaching 14.5%. With plans to add 75 new stores in the coming year and a narrowing of losses in its LimeRoad digital segment, analysts maintain a strong buy rating with target prices reaching up to 1,040. The broader sector outlook remains favorable for the second half of 2026. Improving disposable incomes, driven by government fiscal support and tax reforms, are expected to push FMCG volume growth into high single digits. Companies are increasingly balancing value-led volume growth in rural areas with premiumization strategies in urban centers to maximize profitability.