UBS has identified six Indian companies as preferred stock picks for investors looking to benefit from the country’s ongoing rural demand recovery. The brokerage has selected Britannia Industries and Hindustan Unilever (HUL) from the fast-moving consumer goods sector, Mahindra & Mahindra (M&M) and Eicher Motors from automobiles, and Shriram Finance and Cholamandalam Financial Holdings from the non-banking financial sector.
According to UBS India chief economist Tanvee Gupta Jain, rural households are entering FY27 with stronger financial positions after two relatively good crop years. Improved farm incomes, better savings and healthier household balance sheets could support consumption in rural markets.
Government measures are also expected to provide additional support. UBS pointed to large cash-transfer schemes implemented by several states, continued welfare spending and public investment in rural infrastructure. The new VB-GRAM-G rural employment programme, which replaced MGNREGA from July 1, could also provide a further income cushion, although UBS cautioned that it is too early to evaluate its overall economic impact.
Rural demand is being supported by four major factors: farm income, wages, government transfers and access to credit. UBS said the recovery appears broad-based, with companies across consumer, discretionary and agriculture-linked sectors reporting stronger demand.
Stock-market performance, however, has varied. Shriram Finance has gained 28 per cent in FY27 so far, followed by Eicher Motors at 22 per cent, while Cholamandalam Financial Holdings and M&M have risen 19 per cent each. Britannia and HUL have gained only around 2 per cent, trailing the Nifty 50.
UBS remains cautious about weather risks and rising food prices but expects rural demand to remain resilient.
