The Indian FMCG sector is a league apart. The FMCG Sector in India is a magnifying lens that expands and offers a birds-eye view of India’s grassroots. The FMCG Market has been on a sustainable growth trajectory and has adapted to consumer spending behavior in times of crisis and inflation. As a result, FMCG companies have evolved as the leader in consumer goods and have built strong brands over the course of years. The Brands that constantly evolve their product lines and build supply and distribution chains in India are Nestle India, Hindustan Unilever and Dabur India. These FMCG Giants pretty much dominate the packaged food and personal care products in supermarket shelves. FMCGs and the Consumer Product Industry are significant players in NSE and BSE – the stock exchange and the share prices of FMCGs pretty much reflect their robust performance. In this blog, we curate the top 10 FMCG stocks in India and explain why these companies stand out in the competitive FMCG Market.

Disclaimer: This is not advisory. Curated by our in-house research analyst Raj Pandey.

FMCG Pipelines in India work by Production -> Distributor Hubs -> Retail. 

Desi Brand Wars:

• Dettol Vs Lifebuoy – Reckitt Benckiser Vs HUL (Ad Wars with Soaps Vs Handwashes)
• Bournvita Vs Horlicks – Cadbury Vs HUL
• Colgate Vs Pepsodent – Colgate-Palmolive Vs HUL
• Pantene Vs Sunsilk – Procter & Gamble Vs HUL
• Tide Vs Rin – P&G Vs HUL!!! (Legal Wars!

Did you detect something in common here? Yass! FMCGs. If it’s McDonald Vs Burger King in the USA, FMCGs dominate the brand wars in India. Let us dive into this powerful sector and learn more about the FMCG stocks in India that have the potential to yield high returns.

1. Hindustan Unilever Limited – 

      Market Cap – 5,92,991.93 Crores

      Closing Price – 2565.25 Crores

The ROCE of the company is 20.24%, and the PE ratio of HUL is 64.97.

The company achieved plastic neutrality two years back.

Are you familiar with Lux, Rin, Sunsilk, Horlicks, Ponds, and Knorr.

All these Brands are owned by Hindustan Unilever!

Hindustan Unilever was the first foreign-subsidiary FMCG to be listed in India.  HUL is a strong brand. So much so, that it has emerged as the standard benchmark for comparing valuation in the past few years.

70% of India is rural! Every link in the FMCG chain, redirects back to rural and caters to the grassroots. This is why HUL’s results are a direct indicator of the rural economy in India. HUL grew revenue by 16% and profit by 7.7%, in December. However, this profit was price led and not demand led. This means, Due to inflation, prices were high in rural India. So, FMCGs sold small packs and sachets, to offset high prices. Hence, Market grew by 4.8% – High Price & Volume fell by 6.6% – Small Packets! Hence, HUL’s revenue is a direct indicator of rural consumption!! Hindustan Unilever foresees more demand in FMCG as prices stabilize, now that inflation has reduced.

Business Model:

Hindustan Unilever offers products in 3 segments,

• Food & Refreshments
• Home Care
• Beauty & Personal Care

Legacy Distribution network and Acquires strong brands.

HUL was established in 1933 and has headquarters in Mumbai. HUL has served over 200 Crore customers for more than 87+ years.

HUL owns more than 35+ brands across 20+ categories such as soaps, detergents, cosmetics, tea, packaged soup and toothpaste.

Now comes the interesting part,

Hindustan Unilever owns multiple brands in the same category.

For example, HUL owns Wheel and Surf Excel. Both are detergents.

With this, HUL targets customers who are able to buy the same product at different price points.

Say, 

Lux is priced at Rs. 36

Dove is priced at Rs.48.

Both are Soaps.

HUL also markets the same product differently to different target consumers.

LUX and Dove are marketed as aesthetic soaps. 

But, Lifebuoy, which is also a bathing soap, is marketed as a germ-fighting soap. 

All the below shampoo brands are owned by HUL.

Sunsilk is priced at Rs. 341.

Clinic Plus is priced at Rs. 446.

Tresemme is priced at Rs. 780.

In April 2020, HUL merged with GlaxoSmithKline Consumer Healthcare (GSKCH India) for Rs 3,045 Crores. Apart from Horlicks, brands such as Boost, Maltova, and Viva that were once a part of GlaxoSmithKline Consumer are also under HUL’s umbrella after the merger.

HUL renews its royalty with Unilever for using its Trademark, Tech and Services every 5 years.

2. ITC Ltd., 

Market Cap – 4,21,780.45 Crores

Closing Price –  387.35 Crores

      ITC posted 5K+ Crores Profits and issued Rs.6 as a dividend for every share to shareholders.

ITC’s Legacy:

· Way back in 1999, ITC equipped villages with Windows PCs and an internet connection.

· This kept the farmers informed about Mandi Vs ITC price everyday.

· ITC revolutionized logistics by establishing Mandis within 20-30 Kms from the farmers.

· This eliminated the middlemen who conned farmers to sell produce at government Mandis far from the village.

Driver for Profit – 2K23:

Stable Tobacco Prices – Government had not hiked cigarette taxes for more than 2 years.

This led to a steep hike in revenue from cigarettes for ITC.

Business Model:

Diversified across,

• FMCG, 
• Hotels, 
• Paperboards, and 
• Packaging

The ITC conglomerate was incorporated in 1910 and the company is the country’s leading FMCG marketer. 

PE ratio is 31.26, the lowest on the list.

The ROCE of the company is 31.99%.

3. Nestle India Ltd

Market Cap – 1,90,946.83 Crores

Closing Price –  19708.25 Crores.

PE ratio is 60.83.

ROCE is 73.87%.

Nestle is the world’s largest Food and Beverage Company with 2K+ Brands in 186+ Countries and has been in the market for 150+ years.

Nestle is the brand that gave birth to the industry of instant coffee. After 8 years of intense research, the brand revamped Nescafe with an instant solution – instant coffee.

Update yesterday on April 6, 2023:

Now, Nestle is engaged in a battle to acquire Capital Foods, the brand that owns Ching’s Secret, the Desi Chinese Brand that sells noodles, pasta masala and ginger garlic paste.

Capital Foods sells Desi spices internationally under its label, the Raji brand.

Nestle is the most aggressive bidder for this brand since it foresees that the market for blended spices has the potential to double by 2025. Nestle has not engaged in Mergers and Acquisitions for the past 5 to 6 years like the other FMCGs. So, this will be a potential acquisition by Nestle if this goes through.

4. Britannia

Market Cap – 1,01,423.11 Crores

Closing Price – 4299.80 Crores

Brittania, though 4th in the list by Market Cap snatches a significant portion of the FMCG pie. So much so that Investment Experts and Gurus include Brittania when listing the FMCG Trinity of India – HUL, ITC and Brittania.

This is a legacy and boring FMCG stock that competes directly with ITC most of the time. 

Britannia is India’s key baker with a 100 year legacy and generated an annual revenue of more than Rs. 14,359 Crores last year.

5. Dabur India Ltd.

Market Cap – 98,916.18 Crores

Closing Price – 525.90 Crores.

PE – 53.33

ROCE – 25.75%

Dabur is the world’s largest Ayurvedic and Natural Healthcare company with an experience of more than 133+ years, and an annual revenue of 11K+ Crores.

6. Godrej Consumer Products Ltd.

Market Cap – 87,295.18 Crores

Closing Price – 967.65 Crores

PE – 53.33

ROCE –  25.75%.

Godrej Group is 125 years old and has a strong international presence.

The Consumer Product wing was incubated in 2001.

Shares the same ROCE as that of Adani Wilmar.

7. Adani Wilmar Ltd.

Market Cap – 81912.58 Crores

Closing Price – 409.20 Crores

PE – 70.42

ROCE – 18.81%

Adani Wilmar is India’s Largest Importer of Edible Crude Oil. Context: Fortune by Adani Wilmar is one of the top 100 trusted Brands in India according to the ET Brand Equity Survey taken three years back.

8. Marico

Market Cap – 62,792.31 Crores

Closing Price – 479 Crores

PE – 51.75

ROCE – 46.54%

Marico has operated in the global beauty and wellness market since 1990. The company has bases in 25+ emerging markets across Asia and Africa.

9. Procter & Gamble Hygiene and Health care Ltd – P&G ?

Market Cap – 45,778.98 Crores

Closing Price – 14088 Crores

HUL’s Global competitor and the owner of brands like Vicks, Tide, Oral-B, Duracell, Pantene and Pampers!/

10. Colgate Palmolive (India) ltd. – ColPal

The Stock that finds place in all MBA textbooks and case studies 😉

ColPal is an international conglomerate. In India, the company is involved in dental care products.

Market Cap – 42,926.95 Crores

Closing Price – 1536.05 Crores

Dishwashing Liquids, Rapid Shaves and Toothpastes, ColPal dabbles in a variety of FMCG Products.

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