Street sweet on consumer stocks, while Kotak says valuations are sour

While most sectoral indices have staged a relief rally, FMCG stocks are lagging. Despite the various measures by the government to spur demand, such as the revised income tax rates, along with the rationalisation of Goods and Services Tax, shares of consumer companies have been sulking in the red through 2025.

According to a note by Kotak Institutional Equities' Sanjeev Prasad, the valuations of most consumer stocks are quite outlandish and the Street’s valuation logic is outdated in the context of the fundamentals of consumer companies.

"The Street seems to be onto something, which we are unable to fathom. We would not mind some of the valuation-expanding rationale the Street appears to be consuming to be able to take a more expansive view on valuations of consumer stocks," Prasad quipp