“We like the alcobev space because Tamil Nadu clearly big reforms are likely. TASMAC is likely to get privatised, and it’s a very big market,” Roy said.
Among listed companies, he prefers United Spirits, Radico Khaitan and Allied Blenders and Distillers. He added that United Spirits offers additional valuation comfort because investors could benefit from a potential 10% dividend yield linked to the Indian Premier League (IPL) team sale.
On the other hand, while he believes the worst is over for cigarette companies, he expects another weak quarter. “Even in Q2, there will be a decline in terms of volumes and profit,” he said, adding that he would prefer alcohol stocks over cigarette makers in the near term.
Away from sector calls, Roy remains positive on Marico after the fast-moving consumer goods (FMCG) company’s strong April-June quarter of 2026 (Q1FY27) performance. He noted that earnings before interest, taxes, depreciation and amortisation (EBITDA) grew 25%, the highest in seven years, while India volumes remained in double digits. Although he does not expect Parachute’s 10% volume growth to become the norm, he believes high single-digit growth is sustainable. Other businesses, including Safola Foods, premium personal care and digital brands, also continue to perform well.
Roy acknowledged that Marico’s valuation looks expensive after the stock’s strong run but said quality companies often command premium valuations. “Marico will be one of those,” he said, grouping it with companies such as Pidilite Industries, Nestle India, Asian Paints and Radico that have consistently delivered superior growth.
Roy is also optimistic on FSN E-Commerce Ventures (Nykaa), saying the company’s fashion business was the biggest positive surprise in the quarter. Fashion EBITDA jumped 68%, while fashion net sales value (NSV) grew 53%, complementing continued strength in the beauty business, which expanded 29%. Nuvama has slightly raised its earnings estimates, maintains a Buy rating and has a target price of ₹414. Roy said Nykaa should be valued using a sum-of-the-parts approach because it operates both high-growth and mature businesses.
On Nestle India, Roy believes investors overreacted to management’s comments at the company’s analyst meeting. The stock corrected after management shared category growth expectations, but he sees little reason for concern.
Watch the full conversation here
“I think nothing to worry. I think these are healthy corrections which keep happening in expensive stocks,” Roy said.
He expects Nestle to deliver around 20% revenue growth in the July-September quarter of 2026 (Q2FY27) before growth normalises to 10-12% from the October-December quarter of 2026 (Q3FY27). He also pointed to long-term opportunities in chocolates, prepared dishes and pet food, saying the recent decline should be viewed as a buying opportunity rather than a negative turning point for the company.
Catch all the latest updates from the stock market here
