Companies betting on rural demand to grow: Report

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SME Times News Bureau | 19 Mar, 2019
A brokerage report on consumers and their consumption patterns on Tuesday said that consumption in central Indian rural states and Odisha is growing fast and that it favours companies with reach in both urban as well as rural India.

The Centrum report said that the companies that have realigned distribution and products to the "new rural" paradigm post-GST will be the winners.

"We initiate coverage on Asian Paints, Dabur, Bajaj Consumer and Britannia with 'Buy' ratings, Hindustan Unilever with a 'Hold' rating and Colgate-Palmolive with a 'Sell' rating."

The report added that "new rural" states -- Bihar, Jharkhand, Madhya Pradesh, Chhattisgarh, Odisha, Rajasthan and Uttar Pradesh -- have reported remarkable growth and currently account for 47 per cent of the rural Indian households, but just 30 per cent of consumption, showing the enormous latent potential.

"This is mirrored in consumer companies' strategic shifts and product re-alignments to match this demand. We believe that rural-centric category growth will drive incremental growth as companies focus on the emerging affluent in the New Rural states," the report said.

Commenting on the overall aspects supporting rural growth, the report said the Reserve Bank of India's Consumer Confidence Index has a positive bias, and the Global Competitive Index shows India rising quickly while inequality is relatively low.

India's consumer market is the fastest-growing among BRICS nations and is the fifth fastest-growing market among world economies, it said.