The fast-moving consumer goods (FMCG) sector is one of the largest sectors of the Indian economy. Households spend a considerable part of their income every month buying consumer staples. They also appeal to investors because they provide a stable investment opportunity with low investment and consistent returns in the form of dividends. Interestingly, these stocks are not sensitive to economic cycles, as people tend to buy them even during downturns. Here, we have compiled a list of the top 7 FMCG stocks in India, which you may find helpful if you’re interested in diversifying your portfolio.
HUL, which started operations in 1933, is one of India’s most trusted brands in household goods. HUL’s market cap is ₹5.88 lakh crore, and the company’s products are sold in more than 150 countries.
HUL is a conglomerate in the personal care, beverage, and houseware industries.
With annual global sales of $60 billion, HUL is among the largest FMCG stocks and ranks among the top consumer brands in the world.
HUL has the largest market capitalization of all FMCG companies in India. HUL’s dividend payout ratio is around 90%.
Godrej Consumer Products Ltd.
Godrej Consumer Products, headquartered in Mumbai, has a market capitalization of over ₹83,000 crores.
Food, cleaning supplies, toiletries, electronics, and medical supplies are just some of the many categories covered by the company’s catalog. The firm is known for brands such as Godrej Fair Glow, Godrej No. 1, Cinthol, Renew, ColourSoft, Godrej Shikakai, Godrej Powder Hair Dye, and Ezee.
Profits have risen by a CAGR of 10.4% over the past five years. Both its return on equity and return on capital employed has increased at respectable rates over the past five years, at 19% and 19.6%, respectively. Africa (23%), Indonesia (17%), and Asia (54%; India and others) are some of the company’s major markets. A string of acquisitions has propelled the expansion of the firm’s international business.
From its roots as a tobacco manufacturer, ITC has expanded into various industries. Today, the company is a significant player in the FMCG category in India. The company has a presence in paperboards, printing & packaging products, agricultural commodities, hospitality, branded packaged food, personal care product, branded apparel, safety match, stationery, and agarbatti markets. ITC has expanded into the premium chocolate, ghee, dairy, and frozen food markets.
ITC’s footprint in the fast-moving consumer goods market, other than cigarettes, has grown over time. This demonstrates that ITC is now prioritizing the expansion of its fast-moving consumer goods division. Agribusiness now accounts for 26% of total company revenue, followed by Paper & Packaging at 13% and Hotels at 1%.
As of March 31, 2022, the firm had about ₹30,000 crore in cash and liquid investments, making it an extremely liquid organization. The dividend yield has remained stable at 3.52%, and the company has consistently paid dividends to its shareholders.
Among India’s FMCG stocks list, Britannia Industries Limited stands out. The company’s products range from bread, biscuits, cakes, and rusks to dairy products.
The firm’s dairy products include yogurt, cheese, milk, and other beverages. The lineup includes Marie Gold, Tiger, 50/50, Good Day, Treat, NutriChoice, and Milk Bikis. Britannia’s market value surpassed ₹1 trillion after 130 years in business.
P&G Hygiene Healthcare Ltd.
P&G is among the best-known FMCG companies in India. Procter and Gamble Hygiene & Health Care Limited and Gillette India Limited are the company’s most important affiliates. In India, Procter & Gamble is worth a total of ₹45,752.11 billion rupees.
Nestle is the best company in terms of 5-year returns. In recent years, Nestle India has witnessed tremendous growth, resulting in a market capitalization of ₹1.95 lac crores. Due to the breadth of its product offerings, it is the largest and most successful fast-moving consumer goods (FMCG) company in India.
Nestle S.A. is one of the world’s largest players in the food and beverage sector, holding a 62.7% stake in the Indian unit. One of the many benefits to the Nestle brand is that Nestle India has access to its parent company’s advanced technology and formidable R&D resources. For the past five years, the firm’s PAT has risen by a CAGR of 18%.
Besides, it has kept a healthy return on equity (ROE) of 113% and a return on capital employed (ROCE) of 147%. In addition, the debt-to-equity ratio is extremely low, at only 0.13. Operating margins have been stable at around 22.2% on average.
Dabur India Ltd.
Dabur, founded in Kolkata, made its name as a maker of medical supplies. The firm manufactures products such as ayurvedic medicine, food, and cosmetics. The 5.5% market share that Dabur has achieved in the FMCG stocks category places it among India’s top consumer goods companies.
Consider the following points before investing in an FMCG company
It is important to take into account certain factors before you decide to invest in an FMCG company.
Future growth potential
Among the most important considerations when investing in FMCG stocks is the growth potential of the stock and the sector as a whole.
If you want to invest wisely, you need to look at a company’s track record and find the ones with the most potential for expansion. Such businesses have a better chance of increasing their share price and generating greater profits in the future.
Current financial results
Profit margins, revenues, return on assets, return on capital employed, return on equity, etc., are just some indicators of a company’s current performance that you should examine. If you want to know what’s happening in the business world, keep an eye on the quarterly reports and any industry-related news or policies.
The fast-moving consumer goods industry in India is booming. There has been an increase in the size of the fast-moving consumer goods (FMCG) market due to consumers’ increasing demand for branded products. Investments in FMCG stocks in India offer promising returns, especially in light of the Indian government’s efforts to modernize the industry.
Why should I invest in FMCG stocks in India in 2023?
Invest in FMCG stocks for stability and growth. Rising middle class and constant demand make them a wise investment choice in 2023.
What are the tax implications of investing in FMCG stocks in India?
Tax implications on Indian FMCG stocks vary based on your holding period. Short-term gains are taxed at regular rates; long-term gains have lower tax rates.
Are there any regulatory considerations for investing in Indian FMCG stocks?
Investing in Indian FMCG stocks may involve compliance with SEBI and RBI regulations. Consult a financial advisor for specific guidance.