Recent remarks by consumer companies suggest that growth has slowed in the March quarter led by distress in the rural sector, lukewarm urban demand, liquidity issues in the trade channel, which has led to destocking, and the base effect from last year.

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However, an HSBC survey shows that these concerns are overplayed and the urban consumers in the higher income bracket – the drivers of discretionary spending – are largely optimistic about the outlook for the next 12 months.

"We think that risk tolerance is expected to rise and investors should prepare for a bull market. In this context, consumer staples could underperform the market, but consumer discretionary is well-placed to enjoy strong growth," the report added.

With that in mind, the brokerage has given a list of consumer stocks to look out for in the near future:

Avenue Supermarts | Buy | Target price: Rs 1,700 | Upside: 13.9 percent

Supported by its large scale and strong brand, the brokerage thinks DMART is well positioned to launch private labels in some categories, where margins are higher.

Most respondents spend the most money in supermarkets, which offer a wider range of products and better pricing. While consumers don’t attach too much value to the in-store experience, they seek better value in their grocery basket. In this regard, Avenue Supermart stands out.

Jubilant Foodworks | Buy | Target Price: Rs 1,550 | Upside 7.5 percent

Jubilant Foodworks operates Domino’s Pizza, the largest quick-service pizza chain in India with a network of 1,200 stores across 271 cities.

Jubilant is likely to be the key beneficiary of the rapidly expanding food delivery market. It has competitive advantages in the areas that consumers value and are willing to pay for, such as timely delivery and the freshness of food delivered.

Nestle India | Buy | Target Price: Rs 12,600 | Upside: 16.8 percent

Structurally, the brokerage views Nestle India as an opportunity for growth in India’s consumption as per-capita income increases. Nestle India is likely to be the key beneficiary of the trends of rising consumption of premium packaged food and consumer interest in nutrition as its product portfolio is focused on the urban market and leans towards discretionary spending.

Dabur India | Buy | Target Price: Rs 480 | Upside: 19.4 percent

Dabur’s core focus is Ayurveda and natural products, which are a rising trend with Indian consumers. The company aims to launch several new products exploiting its core strengths. Having learned its lesson after competing with Patanjali, its competitive strategy prioritises volume growth. We think Dabur is the potential structural winner of the natural product and Ayurveda theme.

Reliance Industries | Buy | Target Price: Rs 1,500 | Upside 7.9 percent

Reliance Retail is one of the largest companies in the organised retail market, with a presence in groceries, fashion & lifestyle, and consumer electronics. RIL is the fastest-growing company in the grocery segment.

RIL has a two-pronged approach to growing its grocery business. Reliance Smart, the supermarket format, and Reliance Fresh, a neighborhood store concept, follow the value retailing model by offering competitively priced products.

RIL is looking to scale up these formats in the coming years. It currently has 585 stores across the country, and RIL's grocery business has grown at a CAGR of 37 percent over FY16-19 and the brokerage forecast this will rise to a CAGR 22 percent over the next three years.

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