From fashion to spirits, premium spending holds firm as mass demand wobbles
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India’s consumer discretionary space is set for a mixed December quarter, with pockets of strong growth offset by uneven demand, regional disruptions, and margin pressures across key categories.
While premiumisation continues to drive momentum in select segments such as alcobev and fashion, slower recovery in quick service restaurants (QSRs) and weather-related challenges in beer are likely to weigh on overall performance, according to a Q3FY26 preview by Elara Securities.
“Growth remains selective, with strong traction in premium alcohol and fashion, but demand remains patchy across categories and geographies,” said Karan Taurani, executive vice-president and sector analyst at Elara Securities. “We are seeing consumers still willing to spend on aspirational brands, but everyday discretionary consumption is facing pressure.”
In the spirits segment, Radico Khaitan is expected to outperform peers, driven by robust volume growth in its Indian-made foreign liquor (IMFL) portfolio and strong traction in its premium-and-above brands. Elara estimates IMFL volumes to rise around 16% year-on-year in Q3, supported by new launches and brand extensions. Lower grain prices are also expected to help margins.
“Radico is benefiting from sustained premium demand and easing raw material costs, which should translate into healthier profitability this quarter,” Taurani said. The brokerage expects the company’s EBITDA margin to expand to about 15%.
In contrast, United Spirits may see muted volume growth due to regional pressures, particularly in Maharashtra. While realisations are expected to improve, higher advertising and staff costs could compress margins. “United Spirits is facing a tougher operating environment, with regional issues and cost pressures limiting margin expansion,” Taurani added.
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The beer category is likely to remain under strain, with United Breweries expected to post a slight volume decline due to weak demand in key states such as Telangana, Rajasthan, and Karnataka, as well as unseasonal weather and licensing delays. However, lower input costs may provide some margin relief. “The beer segment continues to face short-term headwinds, though easing commodity prices are offering some cushion on profitability,” Taurani said.
The quick service restaurant (QSR) space is also likely to see a subdued quarter, with same-store sales growth remaining below expectations across most categories.
Demand remains uneven across pizza, burger, and fried chicken formats, with discounting and value-led offers weighing on margins. Jubilant FoodWorks is expected to outperform peers, but Pizza Hut operators Devyani International and Sapphire Foods may continue to struggle with weaker footfalls. “The QSR recovery has been gradual, and that’s starting to show up in same-store numbers,” Taurani said, adding that companies are still navigating the trade-off between volumes and profitability.
Overall, Elara expects the quarter to underscore the divergence within discretionary spending, where premium categories and strong brands continue to grow, while mass and everyday consumption remains uneven. “This quarter will be another reminder that the discretionary recovery is not broad-based. It’s being driven by select winners rather than the entire sector,” Taurani said.
Fashion stays resilient
Fashion retail remains a bright spot. Trent’s standalone revenues are expected to grow about 20% year-on-year, led by aggressive store expansion in its Zudio and Westside formats. The company’s fashion network is projected to grow nearly 30% year-on-year, reflecting strong traction in value-led apparel.
Online beauty and fashion retailer Nykaa is also expected to sustain its growth momentum, with gross merchandise value in both its beauty and fashion verticals likely to grow around 30%. “Nykaa’s growth remains structurally strong, supported by brand partnerships, festive demand, and continued investments in marketing,” Taurani said.
As per the report, fashion profitability may improve with losses down 6% QoQ, likely resulting in 20bps gain in consolidated EBITDA margin at 7.0%.