HUL, Colgate and Dabur could gain from implementation of DBT for food subsidies

Implementation of Direct Benefit Transfer (DBT) for food subsidies is expected to benefit a few of India’s top consumer companies, said Ambit Capital. DBT can result in Rs 45,500-crore rise in disposable incomes of targeted households annually, which in turn can boost rural FMCG demand by 14%. HUL, Colgate and Dabur are likely to be the biggest beneficiaries, according to the domestic brokerage.

While recommending a buy rating on HUL and ITC, Ambit has suggested investors to sell most of the other large FMCG companies like Nestle, Dabur, Godrej Consumer, GSK Consumer, Colgate and Britannia citing rich valuations.

“We believe the incremental expenditure of Rs 12,600 crore on FMCG will be prioritised on the personal hygiene, health, packaged food and personal care categories,” said Saurabh Mukherjea, CEO, institutional equities, Ambit Capital.