Which are the Top FMCG Stocks in India?
Products that are sold quickly and at relatively low cost are known as fast-moving consumer goods (FMCG). Another name for such products is consumer packaged goods. FMCGs have a limited shelf life due to high consumer demand (such as for soft drinks and confections) or perishability (such as for meat, dairy products, and baked goods). The top three sectors of this business are Food & Beverages (19%), Healthcare (31%), and Household & Personal Care (50%), respectively. In this article, explore the top FMCG stocks in India!
An Overview of the FMCG Industry
India's FMCG industry is the biggest in the world. It is estimated that the FMCG sector accounts for around 15% of India’s gross domestic product (GDP) and employs more than 1 crore people. Consumer electronics, food, personal care products, home goods, over-the-counter medications, and other items are all included in this industry. The FMCG industry is optimistic about at least 20% growth in 2023 after ‘exponential growth’ in 2022:
- Favourable government policies, a growing rural market and young population, and the expansion of e-commerce platforms are some of the sector's main development factors.
- India has a middle-class population that is greater than the population of the USA, making it a country that no FMCG company can afford to ignore. The FMCG market keeps expanding as more and more people begin to climb the economic ladder and the general public obtains access to the benefits of economic progress.
- More importantly, India's population is getting more consumerist with growing disposable income. Government efforts to broaden financial inclusion and provide social safety nets have further contributed to this.
- The FMCG market in India is expected to increase at a CAGR of 14.9% to reach $220 billion by 2025, from $110 billion in 2020.
Top FMCG Stocks in India:
|S. No.||Stocks||5-Year Returns|
|1||Hindustan Unilever Ltd.||62%|
|3.||Nestle India Ltd.||123%|
|4||Britannia Industries Ltd.||61%|
|5||Varun Beverages Ltd.||696%|
1. Hindustan Unilever Ltd (HUL)
Home care, beauty & personal care, and foods & refreshment are Hindustan Unilever Ltd's three main FMCG business sectors. The company sells its products largely in India and has manufacturing plants all across the nation. With over 40 brands available across 12 distinct categories, including personal care, fabric care, skincare, hair care, oral care, deodorants, cosmetics goods, beverages, ice cream, frozen desserts, and water filters, HUL is an important part of millions of Indians' lives. Dove, Lifebuoy, Knorr, and Pears Soap are a few of their brands. Home care brings in 34% of the company's income, followed by beauty and personal care (44%) and food & drink (19%). HUL has also forayed into the health and wellbeing segment through two strategic investments.
Over the last 5 years, the company’s revenue has grown at a CAGR of 9.35%, while profits have a CAGR of 14.6%. The company is nearly debt free and has a healthy dividend payout ratio of 99.9%. The stock has moved up 62% over the past five years.
2. ITC Ltd
Established in 1910, ITC is the biggest cigarette producer and retailer in the nation. The five business divisions that ITC now works in are FMCG Cigarettes, FMCG Others, Hotels, Paperboards, Paper and Packaging, and Agri-Business. Aashirvaad, Sunfeast, Yippee!, Bingo!, B Natural, ITC Master Chef, Fabelle, Sunbean, and Fiama are among ITC's top FMCG brands. Additionally, it has added frozen food items, ghee, dairy products, and premium chocolates to its collection of branded packaged meals. ITC is known for assuring precise production and packaging quality. They have a wide variety of distribution outlets in India and have gained access to the remotest of locations through a variety of stores. It is anticipated that ITC will increase its involvement in the eastern market for spices due to its most recent acquisition of Sunrise Foods Pvt Ltd.
The company is nearly debt free and has been maintaining a debt payout of 92%. Over the past five years, the revenue had a CAGR of 7% and net income has had a CAGR of 8%. The company has delivered a poor sales growth of 10% over the past five years. ITC stock has given a decent return of 72% over the past 5 years.
3. Nestle India Ltd.
Nestle India Ltd. is a dominant company in the Indian FMCG market with a strong market presence in the majority of its product categories. The business, which sells various goods under the Maggi brand is a trendsetter in the food service industry. In terms of dairy and nourishment products (96% in infant cereals), drinks (Nescafe 51%), processed foods (Instant Pasta Maggi -69%), kitchen aids (Nestle everyday 44%), and confectionery (63%). The company markets its products under the EVERYDAY, NESCAFE, NESTEA, Maggi, KitKat, Munch, Nestle, POLO, Bar-One, Milkmaid, Milkybar, Alpino, and Eclairs brands, among others.
Nestle India’s revenue has given a CAGR of 11.5% over the past 5 years while the net income has grown at a CAGR of 14%. The company has maintained a healthy dividend payout of about 91%. However, it has delivered poor sales growth of 11.0% over the past five years. The company’s stock has jumped 123% over the past five years.
4. Britannia Industries Ltd.
Britannia Industries has a rich 100-year history. It is one of the major leaders in the Indian biscuit industry with a market share of more than one-third in terms of value. The company's portfolio has a good proportion of each of the seven varieties of biscuits it produces, including glucose, Marie, cookies, crackers, cream, milk, and health. Additionally, the company's whole product line includes recognisable trademarks including Milk Bikis, Tiger, Marie, and Good Day.
Over the past five years, revenue and net income have seen a decent CAGR of 9.3% and 11.5%, respectively. Despite maintaining a high dividend distribution of 123%, the company's growth in sales over the previous five years was just 10.5%. Britannia’s shares have risen 61% in 5 years.
5. Varun Beverages Ltd.
Varun Beverages Ltd (VBL) is engaged in the manufacturing, sales, and distribution of PepsiCo’s beverages in pre-defined territories in India. The company is PepsiCo India's second-largest international franchisee (after the United States) for carbonated soft drinks and non-carbonated beverages. VBL is a part of the RJ Corp group, a commercial conglomerate with holdings in quick-service restaurants, dairy products, and healthcare. Some of the key brands sold under VBL include Pepsi, Mirinda, Mountain Dew, Seven-Up, etc. In addition, the company offers its products in Nepal, Sri Lanka, Morocco, Zimbabwe, Zambia, and Mozambique.
The company has reported an impressive revenue CAGR of 27% and a net income CAGR of 48% over the past 5 years. It has delivered good profit growth of 49.2% CAGR over the last 5 years. It has been maintaining a healthy dividend payout of 17.5%. However, promoter holding has decreased by about 4% over the last 3 years. The stock has given a spectacular return of 696% in the past 5 years.
Other Top FMCG Stocks in India:
- Dabur India
- Godrej Consumer Products
- Colgate Palmolive
- Tata Consumer Products
- Jyothy Labs
In conclusion, India’s FMCG market is expanding quickly. Consumers are increasingly choosy and willing to pay more money for high-quality goods than low-quality ones. The FMCG market has expanded as a result of the rising demand for branded goods. It has grown faster in rural India than in urban India as a result of the expanding number of FMCG startups. The semi-urban and rural sectors are also experiencing rapid growth for these publicly listed FMCG firms in India. This makes FMCG one of the strongest sectors with very high potential. And now you know which are the top FMCG stocks in India you could invest in!
Disclaimer: The stocks mentioned in the article are solely for educational purposes. Please do your own research before investing.