Our life depends on FMCG (Fast Moving Consumer Goods). We use FMCG products on a daily basis. These products have a short shelf-life and satisfy our basic needs. These products are usually produced in a bulk for rapid consumption. Today in this article, we will discuss top FMCG stocks in India.
In India, there are many businesses that are producing FMCG products. When someone asks me about my opinion on investing in FMCG companies for the long term, I would say a big yes without even thinking for a while. These are the companies never affected by the market’s ups and downs. The products are so demanding that no external factors can easily hit these companies. Hence, these are stable companies paying good dividends year on year.
What is FMCG Business?
In the FMCG business, the products are produced in bulk for daily consumption. For example, toothpaste, soap, salt, potato chips, etc. These are examples of FMCG products. Now, you must be thinking that there are many companies who are producing these products so how come there is no business risk? Well, let me clarify that FMCG companies are usually known by their products and not by the name who manufactures them.
For example, Colgate is known as the best toothpaste available in the market but very few people know the product is being manufactured by P&G. In the FMCG business, companies have to build up a strong brand name to be successful. There are many FMCG companies that already have turned into multi-bagger stocks in India.
Best FMCG Stocks in India
I have list down best FMCG stocks in India for you.
ITC Limited
ITC Limited is an Indian company headquartered in Kolkata, West Bengal. ITC has a diversified presence across industries such as cigarettes, FMCG, hotels, packaging, paperboards and specialty papers, and agribusiness. The company has a total of 13 businesses in 5 segments. Also, there are 90 countries where ITC exports its products. Its products are available in 6 million retail outlets.
The company was first established in 1910 as Imperial Tobacco Company of India Limited. It was then renamed India Tobacco Company Ltd. in the year 1970 and then ITC Limited in 1974. The company is more than 100 years old and has an annual turnover of $10.74 billion. There are over 36500 employees across more than 60 locations working for ITC Limited. It is one of the Forbes 2000 companies.
Below are the reason why you should have this stock in your portfolio.
- More than 100-year-old company
- Market leader in the Tobacco business
- More than 25 mother brands, many of them are market leaders
- Regular dividend payer
- Low debt to equity ratio
- Increasing revenue year on year
The key point here is, that ITC Limited has more than 25 mother brands and it is in the business for more than 100 years. You can trust the company for its fair business practice and paying back to the society approach. Some people are considering it as a sin company due to its tobacco business. Most of the revenue for the company is still from the tobacco business. The company has recently started diversifying its business to other FMCG segments. In the near future of let’s say 5 years, it will become the topmost FMCG company in India.
Hindustan Unilever Limited
Hindustan Unilever Limited was established in 1937 as Hindustan Vanaspati Manufacturing Co. It was renamed Hindustan Unilever Limited in June 2007. The company has 35 product brands in 20 categories. The company has more than 18000 employees across the nation.
The company has many products that are leaders in its segment. The company has a market cap of 5.5 lakh crores and is one of the top large-cap companies in India. The products of the company are never going to out of date so the revenues will keep on coming. It also has a good dividend payout ratio in the segment.
The company has its headquarters in Mumbai. It is one of India’s oldest FMCG companies. It is a subsidiary of Unilever, a British-dutch company. The brand includes famous names like Surf excel, Lux soap, Dove, Lifebuoy, etc.
Below is the reason why you should have this stock in your portfolio.
- Biggest FMCG company in India
- Dealing with more than 20 products categories
- The company has more than 35 brands
- 18000+ employees
- Increasing revenue year on year
- Good dividend paying history
In your daily routine, you will be using HUL products that even you don’t know. The company is into multiple products with a huge market share in India. The stock of this company will surely give good returns in the long term. It also has a good dividend-paying history. Must have stock in the core portfolio of an individual.
Nestle India
Nestle India is the Indian subsidiary of Nestle which is a Swiss multinational company. It has its headquarters in Gurgaon, Haryana. The 4 Branch Offices located in Delhi, Mumbai, Chennai, and Kolkata help facilitate the sales and marketing activities. The company was incorporated on 28th March 1959 via a subsidiary, Nestle Holdings Ltd. The parent company owns 63% of the stake in Nestle India. It has 9 production units across India.
The market cap of the company is 1.68 lakh crores and one of the leading FMCG companies in India. It is mainly into the business of food and beverages. One of the leading companies in baby food products in India. Nescafe and Maggi are the products of Nestle India. These are the two products that every Indian has used or at least known to them.
Below are the reason why you should have this stock in your portfolio.
- Biggest FMCG company in India
- 9 production units across India
- Market leader in infant food
- Market cap of 1.68 lakh crores
- Increasing revenue year on year
- Good dividend paying history
Cerelac is the leading brand of Nestle India. It covers 96% market share of the infant baby food in India. Maggi is another very popular product of the company. These two products comprises of more than 20% of the revenue for the company.
Britannia Industries
Britannia Industries is in the food and beverages industry in India. It has its headquarter in Kolkata. It is known to be the oldest existing company in India. The company was founded in the year 1892. The company is now a part of the Wadia group.
The company’s products are biscuits, bread, and dairy products. The company is doing business across 60 countries in the world. 90% of the company’s revenue comes from biscuits. The sales growth of the company is 27% in the last year. Britannia is one of the 100 most brands in India. It has an estimated market share of 38% in India.
Below are the reason why you should have this stock in your portfolio.
- Oldest FMCG company in India
- 38% market share in India
- Revenue growth of 27%
- Increasing revenue year on year
- Good dividend paying history
Biscuit is a product that never going to get fed. Britannia is the market leader in the biscuit category in India. More than 50% of the Indians are consumers of Britannia products. The company has an extensive distribution network in India and abroad. The company is the largest brand in the organized bread market in India.
Tata Consumer Products
It is the biggest tea manufacturing company in India. Around ₹ 10k crores revenue in FY 20, largest salt brand in India, 2nd largest tea brand in India, 4th largest tea brand in UK, largest tea brand. in Canada, No. 1 natural mineral water brand in India. Around 2250 employees across the world.
The company was initially ignored by the Tata group and was not in focus by the tata group. But now they want to revamp the company. The company has generated 10k crores of revenue in the last year. The consumer product business from Tata Chemical Ltd. was merged with Tata Global Beverages. Around 35% of the revenue comes from the consumer beverages business.
Around 56% of the total business for Tata consumer products ltd. comes from the Indian market and the rest is from the foreign market. 16% comes from the US and 11% comes from the United Kingdom.
Financials of Monopoly Stocks
| Company Name | Market Cap (Cr.) | Debt to Equity | PE Ratio | EPS |
|---|---|---|---|---|
| ITC Ltd | 257745 | Debt Free | 19.6 | 10.7 |
| Torrent Power Ltd | 558849 | Debt Free | 68.4 | 34 |
| Nestle India | 169219 | 0.07 | 78.4 | 224 |
| Britannia Industries | 86072 | 0.59 | 46.2 | 77.4 |
| Tata Consumer Products | 65237 | 0.11 | 75.1 | 9.30 |
*as on 31st March 2021
Why Should You Invest in FMCG Stocks in India?
Well, the main benefit of investing in FMCG stocks is the consistency of the business revenue and steady dividends. The demand for the products will always be there. These companies have already established good brand names in the Indian market. The brand re-call value is very high among the consumers.
One should have these stocks in the core portfolio for steady returns and dividends that they are distributing year on year.
Here is why one should invest in FMCG stocks in India.
- Large-cap companies
- Dividend-paying stocks
- Stable revenues year on year
- Potential to become multibagger in the future
- Risk to Reward ratio is low (safe investment)
Conclusion:
These FMCG stocks should be there in your main portfolio for a lifetime. These are the stocks that can give higher returns in the long run. They also have the ability to fetch you higher dividends year on year. These stocks can definitely give higher returns than the bank fixed deposits. The icing on the cake would be its dividend payout every year.
HUL has always been my personal favourite stock. Apart from that I also like ITC and Nestle.