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FMCG Stocks – Top FMCG Stocks in India

  • Akshatha Sajumon
  • 18 Apr
  • 9 minutes

The recent pandemic has impacted every industry and sector in our country. However, there are very sectors in the country that have sustained the volatility due to the pandemic and have managed to keep their bearings. FMCG sector is one of such sectors and also is a major industry in the country. The FMCG stocks are among the dominant sectors on many stock exchanges. 

Given below are the details of the FMCG stocks on NSE.

What is the FMCG Sector?

FMCG sector or the Fast Moving Consumer Goods Sector is one of the prime sectors of our country. It is the fourth largest sector of our economy and represents the demand for various consumer goods in India. This sector boasts of having many key conglomerates and stalwarts of the Indian economy that have created a demand for their products not only nationally but also on an international level. Investment in FMCG stocks is also considered to be evergreen as whether in recession or boom, the demand for basic consumer goods is never going to die. However, it is important to invest in quality stocks from the industry to assure the security of one’s investment as well as growth.

What are the key segments of FMCG stocks?

When we talk about the FMCG sector it includes a variety of consumer goods. It is a huge industry that is essentially divided into three main categories and segments. The details of these segments are mentioned below.

a. F&B

The Food and Beverage (F&B) segment of the FMCG sector includes an ocean of commodities like health drinks, staples, snacks, chocolates, fruits and vegetables, dairy products, bakery products, branded food products, processed food products, meat, poultry, seafood, bottled water, ice, sugar, confectionery, grains, flour, etc. This industry is quite fragmented and has a number of players but no single company can be considered to have a monopoly or direct the share prices. The driving force for demand and supply of goods in this segment is the demographic of the area, the consumption pattern, and the competition. 

b. Healthcare

Healthcare is the second segment of the FMCG sector. This segment includes OTC (Over The Counter) products or medicines as well as any other kind of medicines or equipment that can be needed for the treatment of any ailments. This segment accounts for almost 31% of the FMCG industry making it the second-largest segment. This is a prime sector in the country and has a huge public and private partnership to solve the various health issues of the country. The healthcare industry is expected to grow at a CAGR of 16-17% approximately.

c. Household & Personal Care

The final category or segment of the FMCG sector is the household and personal care segment. This is the largest segment of the FMCG industry and accounts for 50% of the total sector. This sector includes a huge range of products like oral care, skincare, cosmetics, hair care, deodorants, perfumes, paper products, feminine hygiene, cleaning products, etc. 

How to pick top stocks from the FMCG sector?

Investment in FMCG stocks like any other stock requires thorough research and analysis. Investors and traders need to take the help of various tools and techniques of technical and fundamental analysis to pick the best stocks in the industry and ultimately increase their wealth. Some of the basic pointers to understand while picking stocks from the FMCG sector are discussed below.

a. Market share of the company and brand value 

One of the first things to look out for is the name of the company and its brand value. It is also equally important to know the market share of the company in the industry to know its relative position. This will also be an indicator of the customer base and their faith in the company. Investing in such shares can give the investors potentially good returns in the form of dividends or capital gains.

b. Diversified products

A company having a wide range of products belonging to the FMCG sector is usually better for investors and shareholders. This helps them tide over in case one of the segments or sub-segments are underperforming. The diversification of the business helps the investors and shareholders reduce their losses at the same time spread their risk. 

c. Sound distribution network and supply chain management 

The key to every successful company in the FMCG industry is having a strong distribution network as well as a sound supply chain. The importance of these factors was established clearly during the pandemic related lockdowns when consumers were struggling to get basic essentials. Hence, it is important for the company to have a strong supply chain so the production of the goods is not hampered as well as a widespread distribution network so they can reach the desired customers on a timely basis. 

d. Strong business model and financial statements of the past 3-5 years

It is equally important for the investors and shareholders to focus on the fundamentals of the company. A company with strong fundamentals can easily tide over the short-term market volatility and sustain in the long term. Hence, it is 

important for the investors and shareholders to track the performance of the company for the past 3 to 5 years approximately.

Top FMCG Stocks in India

There are multiple FMCG stocks that are traded on the NSE (National Stock Exchange). Some of the top stocks that are traded on NSE and their details are given below. 

a. Hindustan Unilever

HUL is a very well-known name in the Indian FMCG market. A few key details of this industry giant are tabled below.

CategoryDetails
NameHindustan Unilever Limited
ChairmanMr. Sanjiv Mehta
Incorporated1933
BusinessManufacturer of soaps of all kinds
Share PriceRs. 2307.85
PE Ratio64.32
PB Ratio11.27
Dividend Yield1.76%
ROE (TTM)17.59%

b. Dabur

Dabur is a huge company that has a diverse range of products from the FMCG category. The key details of this company are mentioned below.

CategoryDetails
NameDabur India Limited
ChairmanMr. Amit Burman
Incorporated1975
BusinessManufacturer of soaps and detergents, perfumes and toilet preparations, cleaning and polishing preparations
Share PriceRs. 569.70
PE Ratio55.63
PB Ratio12.38
Dividend Yield0.83%
ROE (TTM)24.14%

c. Nestle

Nestle is one of the largest food companies in the world when measured in terms of revenue or other parameters. The company is a Swiss conglomerate having a worldwide presence. The key details of the company are tabled below.

CategoryDetails
NameNestle India Limited
ChairmanMr. Suresh Narayanan
Incorporated1959
BusinessManufacturer of soaps and detergents, perfumes and toilet preparations, cleaning, and polishing preparations
Share PriceRs. 19288.40
PE Ratio82.90
PB Ratio65.09
Dividend Yield1.04%
ROE (TTM)105.31%

d. Marico

Marico is an Indian Multinational Consumer Goods company having its headquarters in Mumbai and a presence in over 25 countries. The key details of this FMCG giant are mentioned below.

CategoryDetails
NameMarico Limited
ChairmanMr. Harsh Mariwala
Incorporated1988
BusinessManufacturer of vegetable oils and fats and owns various brands in hair care, skincare, edible oils, health foods, male grooming, and fabric care.
Share PriceRs. 509.90
PE Ratio55.32
PB Ratio16.68
Dividend Yield1.47%
ROE (TTM)33.97%

e. Colgate-Palmolive

Colgate-Palmolive is an American multinational company. The details of this company are tabled below.

CategoryDetails
NameColgate-Palmolive (India) Limited
ChairmanMr. Mukul Deoras
Incorporated1937
BusinessManufacturer of oral and dental hygiene (toothpaste, toothpowder, mouthwash, oral, perfumes, etc.)
Share PriceRs. 1468.60
PE Ratio37.66
PB Ratio24.01
Dividend Yield2.58%
ROE (TTM)75.11%

Conclusion

FMCG is considered to be a failsafe sector of any economy as the demand for necessities is never going to die. There are many stocks from this sector that are listed on the NSE and are traded by retail as well as institutional investors. 

FAQs

What are the key advantages for the FMCG sector in India?

Some of the key advantages of the FMCG sector in India are mentioned below.
Growing demand
The demand for consumer goods was always high in the urban areas. However, it has gradually also seen an increase in the rural area. There have been many innovations and new types of FMCG products that are introduced in every segment of the sector. This has increased the demand for the sector even in the remotest parts of the country. 
Increased investments
The investment in the FMCG sector has seen a tremendous increase from the private sector as well as through foreign investments. This has further increased the demand for consumer goods and has eventually increased the market share of many FMCG companies. 
Increased purchasing power especially in rural areas
One of the key advantages for the FMCG sector is the increased purchasing power in the rural areas. This increased purchasing power has brought new markets and increased the presence of the companies across India. Rural markets are a huge untapped market. So an increase in the FMCG sector can be hugely attributed to the rural sector. 
Government support
The government has tried to boost the investment in the FMCG sector through various measures and schemes like Production Linked Incentives (PLI), subsidies, relaxation in licensing, etc. Such government support helps the consumer goods reach all the customers at reasonable rates. 
Increased e-commerce and organized market
In recent years, there has been a huge increase of e-commerce portals where consumers can get their daily essentials as well as other FMCG products. This has further broadened the reach of the FMCG industry and the consumer base giving it an additional boost. 

What is the average share or contribution of the urban market in the FMCG sector?

The average share or contribution of the urban sector in the FMCG sector is 55% approximately. The balance of 45% makes up the rural sector.

What are some of the other FMCG giants having stocks listed on NSE?

Some other FMCG giants having their stocks listed on NSE are Brittania, Godrej Consumer Products, Tata Consumer Products, ITC, Emami Limited, etc.

What is the direct impact of an increase in the purchasing power or the disposable income of an average Indian?

Apart from the increase of FMCG market share in the rural areas, the increase in the purchasing power of the average Indian has also opened a new market for premium and branded products from across the world. This has helped many international FMCG giants gain a foothold in India.

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Akshatha Sajumon

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