How to prepare portfolio of F&B shares during festive season

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India is known as the country of festivals where each month a new festival is celebrated. However, 4 months of the year are highly important. In these 4 months there are festivals like Rakshabandhan, Dussehra, Diwali, Guru Nanak Jayanti, Christmas and New Year.  And during this period, the sales of auto, consumer durables, clothing, jewelry, and electronics companies are quite strong. Besides these, in these four months, we also see an increase in demand for food and beverage items along with companies in the restaurant sector. Keeping the festive season in mind, let’s understand which shares to invest in.

During the festive season, people consider taking delivery of new vehicles, which boosts the demand for auto companies. Many people buy consumer durables such as washing machines, refrigerators, ACs, TVs, etc., during festivals. Some people also purchase new clothing, shoes, and jewelry. Nowadays, young people prefer buying electronic products like mobile phones, laptops, iPads, smartwatches, etc.

But apart from all of these, there is also a significant increase in the sales of companies related to the food and beverage business during the festive season. In fact, during Raksha Bandhan, brothers and sisters buy gifts for each other. Similarly, during Diwali, people also visit each other’s homes and exchange sweets and gift hampers as a gesture of greeting. This leads to increased demand for products from companies such as Nestle India, Bikaji Foods, Britannia, Mrs. Bectors, Prataap Snacks, Vadilal, and Dabur.

Not only that, during the festive season, people go to malls, markets, and so on for shopping. And after shopping, the demand for dining out, having pizza, burgers, and more increases, benefiting companies like RBA, Westlife Foodworld, Barbeque Nation, Devyani International, Jubilant Foodworks, Sapphire Foods, and Speciality Restaurants.. Moreover, there is considerable enthusiasm for fast food among the youth, and family outings have become quite popular nowadays, which benefits these companies. This benefit is mostly reflected in the results of these companies and their returns over 6-12 months.

Now, the big question is whether one should invest in the shares of these companies?

According to stock market expert Santosh Kumar Singh, the festive season tends to benefit Quick Service Restaurant (QSR) sector companies the most. Nestle India and Britannia are favored shares in the food and beverage sector, given the expectation of stable growth. However, it’s advisable to consider buying Nestle India shares on a dip. While, in the QSR space, Devyani International and Jubilant Foodworks are preferred options. You can invest in these two companies, with 20-30% of your funds currently and rest gradually on dips.

Most of the capex work related to these four companies has either been completed or is ongoing. This suggests the possibility of these companies’ profits increasing by more than 100% in 2-3 years. This will also have an impact on their share prices, with an expected annual return of 25-30%.

In conclusion, the festive season is quite promising for companies in the food and beverage business. Therefore, by carefully selecting shares of chosen companies, you can build a portfolio with a 2-3 year perspective.