Nikhil Kamath believes Indian consumption story could soon be on a sunny side

The Indian consumption story could soon be on a sunny side as Indians reduce their debts faster than most emerging economies. Zerodha Co-founder Nikhil Kamath said that the domestic consumption is the sector to be in, in the coming decade.

"Lower corporate debt and a household savings rate which is trending down could mean domestic consumption is the sector to be in the coming decade. It's strange that so few domestic consumption stories have scaled to 1000cr plus sales hitherto," Kamath said in a tweet.

“The Indian household sector has reduced its debt as a percentage of GDP from 42% in 2008 to 35.5% in 2022 while the corporate sector has cut its debt from 107.3% to 87.7%,” the tweet said further.

Kamath further said that in contrast, the government's debt has shot up from 71.6% in 2008 to 82.1% in 2022. India ranks third among emerging markets in terms of total debt of $4.65 trillion.

The trend in reduction of household debt has picked up since 2021. However, the household borrowings have risen on the back of consumerism which is further aided by low interest rates.

Contrary to emerging nations, Indian companies have reduced their debt significantly, making room for further capex and less financial risk, the tweet said.

Higher profitability has helped Indian companies to cut debts by 30% since Covid.

On Tuesday, Nifty FMCG index was trading in the green tracking the overall positive sentiments of the benchmarks Nifty50 and S&P BSE Sensex.

The index was trading at 49,233.05, up by 0.36% with 8 stocks trading in the green in this 15-share index.

The top gainer was ITC followed by United Breweries and Britannia Industries. The laggards in the pack were Varun Beverages, Colgate Palmolive and Radico Khaitan.

Tweet EMBED LINK

Lower #corporate debt and a #household savings rate which is trending down could mean domestic consumption is the sector to be in the coming decade.

It's strange that so few domestic #consumption stories have scaled to 1000cr plus sales hitherto. pic.twitter.com/h1UX3aBD6H

— Nikhil Kamath (@nikhilkamathcio) May 23, 2023

Nifty FMCG and BSE FMCG Sector have outperformed their respective benchmark indices Nifty50 and S&P BSE Sensex over the past 12 months. The returns given by them are over 25% each as against 13% and 14% returns given by the 50-stock Nifty50 and 30-share Sensex.

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