Consumer stocks: Revival in rural economy to support earnings, valuation

Consumer companies with rural exposure such as Dabur, Emami, Hindustan Unilever (HUL), Marico and Godrej Consumer Products (GCPL) have got a positive response from analysts post-March 2018 quarter (Q4) results. The combined stock index of this pack is up 14 per cent since the beginning of FY19, double the 7 per cent rise in Sensex. Faster growth in rural business vis-a-vis urban, as seen in Q4, led by the revival in the rural economy, is a key reason. Analysts believe this trend is likely to sustain. 

In Q4, Dabur’s rural sales, for instance, grew 12.6 per cent versus 9.2 per cent