ITC, Maruti among five largecap consumption ideas that rally up to 23%

ITC is one of India’s leading tobacco and FMCG companies with 80 per cent market share in the organized domestic cigarette industry. The company also has a presence in the hotels, agri, paper and packaging segment.


Triggers: Cigarette business is well placed for healthy volume growth with stability in taxes and backed by deterrent actions by enforcement agencies on illicit trades. Hotel business is expected to show continued improvement in performance led by increase in corporate and leisure travel.

Also, the likely demerger of its Hotel business will unlock value for shareholders. FMCG segment is expected to continue to deliver healthy profitability growth led by recent cool-off in commodity prices, sharp focus on cost, mix enrichment and judicious pricing action. We expect ITC to deliver mid-teens earnings CAGR during FY22-FY24 period.


Risk: Input cost pressures, Slowdown in consumption or weak rural demand.

Maruti Suzuki is India’s largest passenger car maker having over 4 decades of experience in the Indian automobile industry. The Company’s manufacturing facilities are capable of producing about 1.5 million units per annum.


Triggers: Maruti has plans to set up a new plant at Haryana for 2.5 lakh additional capacity with a capex of Rs 11,000 crore. The plant is expected to be operational by 2025. Maruti currently has 3,50,000 units of the domestic order book.

Maruti Suzuki has received strong traction in its SUV segment like the new Brezza (70,000 bookings) and Grand Vitara (20,000 bookings) which together account for 90,000 units of order. Strong demand and launch of premium products in the SUV segment augurs well for market share gains and margin expansion.


Risk: Persisting chip supply shortages; High steel prices; Slowdown in auto industry

Bata India is the largest retailer and leading manufacturer of footwear in India. It’s four state-of-the-art production facilities are located strategically across India, producing a variety of footwear for a diverse customer segment.


Trigger: The brand Bata stands synonymous with quality, style, and comfort. The company, due to its product mix, enhanced store experience, and digital initiative has become more relevant and appealing to a wide audience.

The company has a strong pan-India presence with 1,569 stores across cities, including franchisee stores. It has 4 manufacturing units with an annual capacity of 21 million pairs.

The per capita footwear consumption in India is 1.9 pairs versus the world average of 3.2 and China’s 2.9 pairs. The per capita shoe expenditure at $1.1 is also lower than the world average of $13.3. Given the rising per capita income, India’s footwear market is expected to double to USD 25 billion by 2025.
Risk: Fragile rural demand; High inflation impacting purchasing power of consumers.

Established in 1968, VIP Industries is one of Asia's leading branded players in manufacturing and marketing of hard and soft luggage, duffle bags, backpacks and accessories. The company has various leading brands across luggage segments catering to the lower and upper segments of the demand pyramid.


Triggers: The company has well-established brands like VIP, Skybags, Carlton (premium segment), Aristocrat, Alfa and Caprese (ladies hand bag) in its portfolio. It is a leader in the organized luggage industry.

During 1QFY20 (pre-pandemic), revenue split as per the source of manufacturing stood at 35 per cent from own manufacturing, whereas was 40 per cent from China and 25 per cent from third party manufacturing. In 1QFY23, this mix has shifted significantly in favour of own manufacturing with contribution at 64 per cent.


Risks: Raw material inflationary pressure; Volatility in forex; Demand slowdown on account of any restrictions on travel and hospitality industry.

CCL Products (India) is the world’s largest private label coffee processing company engaged in the production, trading and distribution of coffee products. The company has operations in Vietnam which is the second largest green coffee manufacturing country after Brazil. The company exports its products to more than 90 countries.


Triggers: The Company has a strong balance sheet with a D/E ratio of 0.5x. In the past 10 years, it has expanded its sales by 3x while net profit has jumped 6x during the same period.

CCL has a total capacity of 25,000 tonnes in India and 13,500 tonnes in Vietnam currently. The company is planning to expand its Vietnam facility by 16,500 tonnes by 4QFY23 with a total capex of $30 million. The RoE from this new facility is expected to be at 20 per cent.


Risks: : Input cost pressures; Slowdown in consumption or weak rural demand.