Summer Internship Report on

Fundamental analysis of FMCG sector.

Submitted in partial fulfilment for the award of the Degree of
Master of Management Studies (MMS).

Submitted by
Harshita Bulchandani.
ROLL NO. 13
MMS (Finance)

Under the Guidance of

Dr. Pradip Mitra.
(A.Y. 2021-23)
 Certificate
This is to certify that project titled “Fundamental Analysis of FMCG Sector” is

successfully completed by Ms. Harshita Bulchandani during the II semester, in partial

fulfilment of the Master’s Degree in Management Studies recognized by University of

Mumbai for the academic year 2021 – 2023 through VIVEKANAND EDUCATION

SOCIETY’S INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, MUMBAI.

This project work is original and not any one has submitted earlier for the award of

any degree/diploma or associateship of any other University brands.

Name: Harshita Bulchandani

Date: 15th July, 2022.

(Dr. Pradip Mitra)

Signature of the Guide
 DECLARATION

I hereby declare that this Project Report submitted by me to the project mentor –

Mr. Pradip Mitra sir is a bonafide work undertaken by me and it is not submitted to

any other University or Institution for the award of any degree diploma/certificate or

published any time before.

Name: Harshita Bulchandani

Roll No.: 13 (Harshita Bulchandani)

Signature of student
 Acknowledgement.

To begin with, I would like to take the privilege to convey my gratitude to all those
who have supported and guided me to complete this project. Without them I
wouldn’t have made headway in the project.

I sincerely thank my industry mentor, Mr. Rohan Pathare for introducing me to the
world of equity research and constantly guiding me to accomplish the assignments. I
would like to thank ‘Finlatics’ for giving me the opportunity to spend my 2 months as
an intern in their organization. I would also like to thank Dr. Pradip Mitra, for
constantly guiding me and pushing me to do better and better every-day.

I extend my gratitude to Vivekanand Education Society Institute of Management

Studies and Research for giving me this opportunity.

Last but not the least, I would like to thank my family and friends who have directly
or indirectly helped me to complete this project.
Sr. No. Topics Page No.
1. Executive summary. 1

2. About Finlatics. 2

3. Fundamental analysis- Basics. 3-4

4. Fundamental ratios. 5-7

5. Over-view of FMCG sector. 8-10

6. Quantitative analysis. 11-20

7. Qualitative analysis 21-45

8. Conclusion- My view. 46-47

9. References. 48
 Executive summary.
This project report is about ‘Fundamental analysis of FMCG stocks’. To begin with, I have explained
what fundamental analysis basically is and how it is done. I have spoken about the FMCG sector, I
have also tried to explain the recent past and current happening in the FMCG sector with some of
my view about the future of the FMCG sector. This report also consists of explanation of some
fundamental ratios. Further, I have picked up top 8 FMCG companies and have conducted
quantitative and qualitative analysis on all of these companies. First, I have conducted quantitative
analysis on these companies and kept 2 companies in my watchlist on the basis of a few parameters
and their benchmarks. Lastly, I have conducted qualitative analysis on all the 8 companies, wherein I
have mentioned about the business of the company and some key factors that would help us pick
the stocks from FMCG sector.

The conclusion of this project report talks about MY point of view about the stocks that I have finally
shortlisted after all the analysis. It is not, in any form, a recommendation and must not be followed
blindly. The conclusion also talks about the target price and the entry price of the stocks that have
been shortlisted.

As per statistics, in 2020, only 3% of India’s population (out of a total population of ~138 Cr) invest in
the stock market. With this report I expect all readers, to get basic insights about fundamental
analysis, feel encouraged to participate in the stock market and be able to get another source of
income.
 About Finlatics.

With the motive of making finance more understandable and comprehensible, Finlatics was started
in 2017. It is a platform which helps students to get experience in financial management, portfolio
management, investing banking, equity research, venture capital and many other which can build
students career in finance.

They are providing financial market equity program in which we can use fictitious money which is
given by them and can maintain a stimulated portfolio on BSE 500 listed companies and also industry
mentor is providing us details or hints of stocks i.e. which stocks are gainers and who are losers and
accordingly he recommends us to invest and at what points sensex has started and closed.

Finlatics, one of the companies selected for incubation at the prestigious Atal incubation centre-
NMIMS, supported by Government of India , NITI Aayog & Atal Innovation Mission.
 Fundamental analysis- Basics.
Fundamental analysis:

Fundamental analysis is a way of finding out the intrinsic value of a company’s stocks
based on the quantitative and qualitative factors. It is the analysis done by investors
with the purpose of wealth maximization. The core idea of investors here is to enter
stocks that are fundamentally strong. They invest when stocks are undervalued to
gain from the price appreciation in the future and exit the stock when they are
overvalued, to prevent loss or fall in the price.

Purpose of Fundamental analysis:

The key purpose of fundamental analysis is to see how well the intrinsic value of the
company is reflected in its market price. Intrinsic value is the true value of the
company’s stock based on the performance and its fundamentals. In other words,
intrinsic value of a stock reflects the actual worth of the company.
• Intrinsic value > Current market price Under-valued
• Intrinsic value < Current market price Over-valued
• Intrinsic value = Current market price Fairly-valued

There are 2 approaches of doing fundamental analysis:

Bottom to Top
Top to bottom

Economy Economy
Industry Industry
Company Company

Most investors use ‘top to bottom’ approach. In top to bottom approach, we look at
the prevailing economic conditions and identify the industry that can be affected by
these economic conditions. Once the industry is identified, we conduct company
analysis of the identified industry. The bottom to top approach is the complete
opposite of top to bottom approach.

Fundamental
analysis.

Economy Industry Company

Newspapers, Qualitative- Quantitative- Ratio

magazines, current Company's know- analysis, Finacial
affairs. how. statements.

The Industry and the Economy can be analysed with the help of newspapers &
magazines. The company analysis is based on 2 parameters- Qualitative factors and
Quantitative factors. The qualitative parameters will be discussed further when I’ll
be comparing the companies. The quantitative analysis is based on some ratios and
financial statements of the company. Some important ratios are explained further,
that will help us understand the financial health and position of the company.
 Fundamental Ratios.
There are 4 types of ratios: [Link] ratios. 2. Efficiency ratios. 3. Solvency
ratios. 4. Liquidity ratios. These ratios are futher classified into many subtypes. The
ratios and their subtypes are discussed below.

Ratio analysis.

Profitability
Efficiency ratio. Solvency ratio. Liquidity ratio.
ratio.

Accounts
Return on Return on Asset turnover Debt-equity
Profit margin. recievables Current ratio Acit test ratio.
asset. equity. ratio. ratio
turnover ratio.

1. Profitability ratio: Profitability ratios are used to assess a company’s ability

to generate earnings (profits) relative to its- revenue, operating costs, assets, or
shareholders' equity over time (Balance sheet) or by using data from a specific
point in time (profit &loss statement). The types of profitability ratios are
mentioned and explained below.

(a)Profit margin: This ratio reflects the earnings we are generating from the
revenue i.e. the core source of income.

Profit margin = Net income

Net sales
(b)Return on asset: This ratio helps us know how much profits are we earning
from the assets that are invested into the business.

Return on asset = Net income

Average total assets
(c )Return on equity: This ratio tells us about the profits we are generating
from the equity that has been invested into the business. This ratio also tells us how
fairly is the company treating it’s equity shareholders.

Return on equity = Net income

Average total equity

2. Efficiency ratios: Efficiency ratios are used to analyse a company’s ability to

effectively employ its resources, such as capital and assets, to produce income.
The types of efficiency ratios are mentioned and explained below.

(a) Accounts recievables turnover ratio: This ratio measures how many times in a
year can a company convert its accounts recievables into cash. A high ART
would mean that the company is efficient enough to convert it’s accounts
recievables into cash.

Accounts recievables turnover = Net sales

Average accounts recievables

(b) Asset turnover ratio: This ratio measures the company’s ability to use its
assets to generate sales. The higher this ratio the better the operating
efficiency of the company.

Asset turnover ratio = Net sales

Average total assets

3. Solvency ratio: ‘Solvency’ represents the companies long-term financial

viability and its ability to cover long-term obligations. (Unlike liquidity ratio that
sees the short-term obligation). This ratio has one ratio in specific that helps
investors determine the capital structure of a company.

Debt to Equity ratio = Total Liability

Total equity
 OR
Debt to Equity ratio = Total long-term debt
Total equity

4. Liquidity ratios: These ratios measure the Company’s ability to meet its
short-term obligation . These ratios are mentioned and explained below.

(a) Current ratio: This ratio tells us about a company’s ability to pay-off its short
term obligation with the help of its liquid assets (Assets that can be easily
converted into cash).

Current ratio = Current assets

Current liability

(b) Acid test ratio: This ratio is a bit more restrictive than the current ratio. In this
ratio we look at assets that can be coverted into cash within 2-3 days, these
assets are called as quick assets. Inventory, which is a current asset cannot be
converted into cash within a span of 2-3 days and thus, is not a quick asset.
Similarly, Prepaid assets are current assets but cannot be included in quick
assets as they can’t be converted into cash.

Acid test ratio = Quick assets

Current liability

These are the basic ratios that are most commonly used by investors. So far, we
know that we first begin with understanding the changes or happenings in the
economy and then identify the industry that is being affected by these changes. We
then proceed to understand the qualitative and quantitative aspect of the companies
in the industry. Further in this research, I will be doing the fundamental analysis of
FMCG sector.
 Over-view of FMCG sector.
Now, since we know what fundamental analysis is and how it is done let’s do
fundamental analysis of an industry that is the 4th largest sector in the Indian
economy- FMCG industry.
The FMCG industry is responsible for producing, distributing and marketing fast-
moving consumer goods. The most commonly sold FMCG are- Home care products,
personal care products and food products. The products produced in this industry
are consumed by people belonging to all strata. FMCG sector is more lucrative
because of low penetration levels, well established distribution network, low
operating cost, lower per capita consumption, large consumer base and simple
manufacturing processes for most of products resulting in fairly low capital
investments. Due to presence of MNCs and unorganized sectors the competition in
this industry is really high. This industry has a high inventory turnover and thus it is
known as Fast moving consumer goods.
The FMCG sectors has been classified into 3 major segments namely

Market share (in %)

19%

Personal care and house-hold

50%
Health care
31% Food and beverages

In the last 8 years, the FMCG sector has grown at a rate of 21.4% with a major
change in the revenue, growing from US $31.6 billion in 2011 to US $68.4 billion in
[Link] drivers of such significant growth have been -
(1) GST launched in 2017: Soaps, oil and tooth-paste come under the tax bracket of
18% which was previously 23-24%. Also, food products and hygiene products
come under the tax bracket of 0-5% and 12-18% respectively.
 Over-view of FMCG sector.
(2) Increase in income of people leading to higher purchasing power.
(3) Brand consciousness that has changed the lifestyle of people.
(4) Higher awareness of products due to E- commerce.
(5) Growing youth segment and working women population.
In 2020, the sector has earned a revenue of $110 billion US. The year 2021 saw 16%
growth in the market share of the FMCG sector which is ~$127.6 billion US (source
IBEF)

Market size (in billion US $)

250

200 220

150

127.6
100
110
83.3
50 68.4
49 52.8
31.6 33.3 35.7 38.8 43.1
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E

In 2020, the rural sales saw up-hill trend due to reverse migration and good monsoon
that increased the purchasing power of the rural population, in-fact in 2020 the rural
sales contributed to ~45% of revenue of the FMCG sector. Seeing this vast scope of
growth in the rural market the FMCG companies started to focus more on the rural
sales.
However, in 2021, the wholesale channels could not maintain a high level of
inventory and even after a high rural demand for consumer good, the rural sales saw
a downward trend, went down from 45% to 35% (Source- Nielsen). To prevent this in
future, the FMCG companies are currently trying to focus on the direct distribution
channels and are working on understanding the demand and consumption pattern of
the rural consumers. Even after facing difficulties in the previous financial years the
sector saw a market share growth of 16%.
With good growth in the previous financial year, the company has had to face the
adverse effects of inflation due the Russia-Ukraine war. The prices of crude oil, palm
oil and wheat has increased due the war resulting in the increase in cost of these
products. Thus, an increase in prices of consumer products. However, I believe that
there are some factors that can play an important role in the growth of this sector in
2023. The first factor is digitalization. By digitalization I do not mean online shopping
 Over-view of FMCG sector.
facilities for customers (there are already great e-commerce platforms for that),
online ordering facilities to retailers can bring value and save time. The second
factor is direct distribution channels, these channels can help reduce the middle man
cost and could save guard the profit margins in the coming year. The third factor is,
increase in FDI. The Government Of India has allowed 100% FDI for single brand
retail and food processing industry and 51% FDI is allowed for multi brand retail.
With this the foreign companies will not only bring money for development but
would also bring their knowledge, skills and technology which would ultimately
improve the performance of the FMCG sector. The introduction of FDI would also
increase the competition which can be seen as an opportunity for the existing brands
to come up with innovations and developments to safeguard their market share,
which would ultimately benefit the consumers.

As per IBEF, the FMCG sector is expected to grow to 220 billion $ by 2025, a
projected growth of 14.6% CAGR. According to IBEF, the rural market share has a
huge potential for growth which is highly beneficial as 60% of population in India is
rural and only 35%-45% of the revenue of FMCG sector comes from rural
consumption. Thus, there is a vast room for growth.
For analysing the FMCG sector I would be using Porter’s 5 force model. This model
will help us identify the Rivals, bargaining power of buyers and seller, threat of new
entrants and substitutes.
• Rivalry among competitors: With the presence of multiple companies that
sell similar products and price competition, there is cut-throat competition
and rivalry in this sector. Remark- High.

• Bargaining power of suppliers: The suppliers have low bargaining power

which is beneficial for the companies. This is because the FMCG companies
can easily switch suppliers at a very low cost thus allowing the companies to
dictate the price. Remark- Low.

• Bargaining power of buyers: The buyers can easily switch to other similar
products available in the market at a very low cost. Thus, the buyers do have
high bargaining power. Remark- High.

• Threat of new entrants: The entry of new businesses is FMCG industry is easy
as compared to other industries like banking. However, the threat from these
 Over-view of FMCG sector.

entrants is low as its difficult to get the trust of customers to shift from the existing
brands to a completely new brand. Remark- Moderate

• Threat of substitutes: As I mentioned earlier, there is presence of many

companies that sell similar products causing a threat of high product
substitution. Remark- High.

With the help of Porter’s 5 force model, we can see that this is actually a very
competitive sector and surviving in this particular industry in not a child’s play.
To sum-up we can see that there is a lot of room for growth in the FMCG sector,
thus, investing into FMCG stocks can be beneficial. But the question here is, which
company should we invest in? How should we choose the companies to invest in? All
of this will be discussed next as we do the company analysis.
 Quantitative analysis.
Since we know about the economy and the industry, Let’s look at some companies in
the FMCG sector and conduct their company analysis. We will first find out the
quantitative parameters where we will be looking at some ratios, in addition to that,
we will also be looking at some other quantitative parameters that are discussed
below. The qualitative analysis would be done once we are through with the
quantitative analysis. The companies that we will be looking at are- Nestle India ltd,
HUL, Dabur ltd, Britannia Industries ltd, Tata consumer products, Godrej Consumer
products, Marico ltd and Colgate-Palmolive.

Quantitative parameters and their benchmarks:

(a) CARG% of price in last 5 years- This parameter will help us know whether the
price of the stock has any potential to grow further. If the CAGR% of price in the
last five years is less than the sales and profit growth AND other parameters meet
our benchmark then we can conclude that the company’s stock has a potential to
grow. For Example: If the sales and profit growth of company X ltd is around 20%,
the CAGR% in price is 15% and the other parameters are meeting the set
benchmarks, then the stock has a potential for growth (at-least till it reaches the
profit and sales growth) and can be a multi-bagger.

Company CAGR% CAGR% CAGR% Comments on the basis of

of price of sales of comparison of CAGR% in price
in the in the profits with CAGR% in sales and profits.
last 5 last 5 in the
years. years last 5
(in %) (in %) years
(in %)
Nestle India 21.6 9.98 16.46 More than the profits and sales.

Britannia industries 15 9.71 13.7 More than the profits and sales.
Marico 11 5.45 9.86 More than the profits and sales.
Tata Consumer products 37.2 20.96 26.26 More than the profits and sales.
HUL 17 9.93 14.45 More than the profits and sales.
Godrej consumer products 5.4 6.55 11.12 Scope for growth.
Dabur India ltd 12.2 6.11 8.07 More than the profits and sales.

Colgate- Palmolive 9.4 4.59 12.24 Scope for growth.

However, the above scenario generally happens in case of mid cap companies and
the companies that we are looking at belong to the large cap. Thus, our bench for
this parameter would be- The CAGR% of price in the last 5 years should be greater
than the sales and profit growth of last 5 years. (Provided other parameters are also
meeting the set bench-marks)

(b) Current ratio- This ratio tells us about a company’s ability to pay-off its short-
term debts with the help of current assets (Inventory, cash and receivables). A
current ratio greater than 1 is considered favourable

Company 2018 2019 2020 2021 2022

Nestle India 2.55 1.74 1.68 1.05 Not

available
Britannia industries 2.03 1.94 1.45 1.22 1.21
Marico 1.92 1.86 1.03 1.08 1.01
Tata Consumer products 2.84 3.90 2.87 2.28 2.25
HUL 1.28 1.36 1.31 1.26 1.34
Godrej consumer products 1.24 1.20 1.06 1.08 1.43
Dabur India ltd 1.41 1.35 1.98 1.63 1.30
Colgate- Palmolive 1.08 0.96 1.16 0.85 1.37
If we observe the table above, we’ll see that there has been a decline in the current ratios of
all the companies over the years. This could mean that there has been an increase in short
term debts or an increase in current assets or a combination of both. Whatever it may be, a
decline in the current ratio denotes a reduction in cash generation ability. Now lets rank the
companies on this parameter. I’ll be calculating the average current ratio of all the
companies in the last 5 years and would be ranking them with the highest current ratio
being the 1st rank and the lowest current ratio being the 8th rank.

Company Average Rank

current
ratio
Nestle India 1.76 2
Britannia industries 1.58 3
Marico 1.38 5
Tata Consumer products 2.83 1
HUL 1.33 6
Godrej consumer products 1.20 7
Dabur India ltd 1.48 4
Colgate- Palmolive 1.08 8
(c ) Debt to equity ratio- This ratio will convey the proportion of funds that a
company gets from its borrowings and from ownership. In FMCG sector the debt-to-
equity ratio is generally between 0-1. This is because they have a huge Reserves &
Surplus and thus, they do not opt for borrowing. Thus, debt to equity ratio between
0-1 would be my benchmark.

Company 2018 2019 2020 2021 2022

Nestle India 0.01 0.03 0.02 0.02 Not available

Britannia industries 0.05 0.03 0.34 0.59 0.91
Marico 0.12 0.12 0.11 0.11 0.10
Tata Consumer products 0.15 0.15 0.09 0.05 0.07
HUL 0 0 0 0 0
Godrej consumer products 0.40 0.40 0.34 0.08 0.14
Dabur India ltd 0.15 0.09 0.07 0.06 0.12
Colgate- Palmolive 0 0.05 0 0 0

In the above table, the debt-to-equity ratio of Britannia has increased, especially
from 2020, this is because of the new manufacturing unit that they have been
planning to set up in Uttar-Pradesh since 2020. The debt-to-equity ratio of Nestle,
Marico and Godrej consumer products have decreased over the years which is a
good sign. In this parameter, HUL and Colgate-Palmolive are the best companies
because they are debt free companies. Let’s rank the companies now,

Company Average Ranks

Debt-to-
Equity
ratio.
Nestle India 0.02 3
Britannia industries 0.38 7
Marico 0.11 5
Tata Consumer products 0.102 8
HUL 0 1
Godrej consumer products 0.27 6
Dabur India ltd 0.10 4
Colgate- Palmolive 0.01 2
(d) Return-on-equity- This ratio denotes the company’s ability to maximize wealth of
its shareholders. In other words, it talks about the returns the company has given on
the investments of its shareholder. Generally, a ROE greater than 20% is considered
favourable. I would be comparing the companies and whichever company has a
better ROE than the other would be considered favourable.

Company 2018 2019 2020 2021 2022

Nestle India 45.30 70.39 105.76 104.53 Not available

Britannia industries 32.69 30.99 35.94 46.74 56.31
Marico 24.15 34.74 31.8 37.69 38.59
Tata Consumer products 7.04 5.58 3.33 5.90 6.18
HUL 77.56 82.24 86.11 28.29 18.33
Godrej consumer products 26.11 32.22 18.94 18.23 15.43
Dabur India ltd 23.73 25.61 21.87 22.09 20.75
Colgate- Palmolive 28.16 38.32 42.37 43.70 48.16

The return on equity of Britannia industries ltd has seen a gradual increase over the
years which is a good sign and denotes that the company is improving its profitability
over the years. Nestle has the highest return on equity and makes the maximum use
of its shareholders funds. Tata consumer products doesn’t even reach our
benchmark and is not giving proper returns to its equity shareholders.

Company Average Rank

ROE.
(in %)
Nestle India 81.50 1
Britannia industries 40.53 3
Marico 33.40 5
Tata Consumer products 5.61 8
HUL 58.51 2
Godrej consumer products 22.20 7
Dabur India ltd 22.81 6
Colgate- Palmolive 40.21 4
(e) Asset-turnover ratio- This ratio tells us about the performance of the company. It
denotes how well the company uses its assets to generate sales. Generally, an ATR
greater than 1 is considered to be favourable. I would be comparing this ratio with
other companies, whichever company has a better ART than the other would be
considered favourable.

Company 2018 2019 2020 2021 2022

Nestle India 1.40 1.72 1.77 1.83 Not available

Britannia industries 1.91 1.77 1.48 1.64 1.78
Marico 1.55 1.49 1.47 1.64 1.55
Tata Consumer products 0.64 0.66 0.52 0.45 0.46
HUL 1.99 2.11 1.97 1.68 1.74
Godrej consumer products 0.70 0.73 0.66 0.77 0.76
Dabur India ltd 0.89 1.01 0.92 0.88 0.87
Colgate- Palmolive 1.63 1.70 1.74 1.67 1.76

The asset turnover ratio of Nestle has been increasing over the years, which means that the
company is performing efficiently and is utilizing its assets to the fullest to generate sales. Rest
of the companies are seeing a fluctuating asset turnover ratio. The ranking of the companies
based on the asset turnover ratio is done below.

Company Average Ranks.

Asset
turnover
ratio.
Nestle India 1.68 4
Britannia industries 1.72 2
Marico 1.54 5
Tata Consumer products 0.55 8
HUL 2.37 1
Godrej consumer products 0.72 7
Dabur India ltd 0.91 6
Colgate- Palmolive 1.70 3

(f) Earnings per share - EPS is the profit that each share is assigned out of the net
profits earned by a company. This is calculated by dividing the net profit with the
number of shares in the market. A gradual increase in EPS is considered to be
favourable.

Company 2018 2019 2020 2021 2022

 Nestle India 127.07 166.67 204.28 215.98 222.46
Britannia industries 83.65 48.25 58.35 77.43 63.31
Marico 6.32 8.64 7.91 9.08 9.50
Tata Consumer products 7.85 6.47 4.99 9.3 10.15
HUL 24.09 27.97 31.17 34.03 37.79
Godrej consumer products 23.99 22.91 14.64 16.83 17.44
Dabur India ltd 7.69 8.17 8.18 9.58 9.84
Colgate- Palmolive 24.76 28.52 30.02 38.07 39.65

Nestle has the highest and sees a gradual increase in EPS over the years which is a good sign. HUL,
Marico, Dabur and Colgate- Palmolive have seen a gradual increase in their earnings per share,
however, HUL and Colgate-Palmolive are giving better earnings than Marico and Dabur.

(g) The sales growth and profits growth- This parameter will help us know whether
the company has been able to have a stable growth or a gradual increase in growth
in the last 5 years. A gradual increase in growth is favourable.

• Sales trend of last 5 years (in Cr):

Companies
2018 2019 2020 2021 2022

Nestle India 11,300 12,400 13,400 14,700 -

Britannia industries 9,300 10,500 11,000 12,400 13,400
Marico 4,900 5,200 6,000 5,900 6,300
Tata Consumer products 3,200 3,400 5,700 7,200 7,900
HUL 34,500 38,200 38,800 46,000 51,200
Godrej consumer products 4,700 5,300 5,700 5,500 6,300
Dabur India ltd 5,300 5,600 6,300 6,300 7,200
Colgate- Palmolive 4,000 4,200 4,500 4,500 4,600
 Sales of last 5 years (in Cr)
60,000

50,000

40,000

30,000

20,000

10,000

2018 2019 2020 2021 2022

From the above bar graph, we can see that Nestle, HUL & Tata consumer products
have seen a gradual increase in sales. This means that these companies have been
constantly trying to increase their market share by means of introducing new
products, increased marketing activities, etc. Out of the 3 companies that have seen
an increase in sales HUL has the highest sales.
 • Profit trend of last 5 years (in Cr):

Companies
2018 2019 2020 2021 2022

Nestle India 1,600 2,000 2,100 2,100 -

Britannia industries 947.89 1,100 1,500 1,800 1,600
Marico 842.7 718 1,100 1,000 1,100
Tata Consumer products 534.32 410.93 523.54 619.51 885.75
HUL 5,200 6,000 6,700 8,000 8,800
Godrej consumer products 847.72 1,000 1,800 1,200 1,200
Dabur India ltd 998.33 1,100 1,300 1,200 1,400
Colgate- Palmolive 577.43 673.37 775.57 816.47 1,000

Profit trends of last 5 years (in Cr)

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0
Nestle India Britannia Marico Tata HUL Godrej Dabur India Colgate-
industries Consumer consumer ltd Palmolive
products products

2018 2019 2020 2021 2022

From the above bar graph, we can see that HUL has the highest profit and the profits have been
growing every year. Nestle, on the other hand, has seen a profit growth in 2019 and has seen
constant profits in 2020 and 2021.

If we combine the sales growth and profit growth observations, we can see that HUL and Nestle are
the 2 companies that have seen an increase in sales and profits, which means that these companies
are taking efforts to reduce their cost and increase their sales though innovations to safeguard their
profit margins.
 (h) Price to earnings ratio- This ratio tells us on what premium is the stock currently
trading at. It is calculated by dividing the current market price of the shares with the
Earnings per share. A P.E. higher than the industry P.E. generally means that the
investors believe that the price of the share or the business has the potential to
grow further, thus, they invest into this stock at a higher price making it trade at a
premium.

Company Nestle Britannia Marico Tata HUL Godrej Dabur Colgat Industry
e average.
(as of
22nd sept
2022)
P.E ratio 69.66 62.68> 54.55> 88.4 61.67 61.81> 70.41 40.69< 43.24
> > > >

Now, on the basis of the fundamental ratios i.e. Current ratio, debt-to-equity ratio,
asset turnover ratio and ROE, we have given ranks to the companies. On the basis of
these ranks we will be removing a final ranking for the companies to conclude which
company or companies can we invest our money in on the basis of quantitative
factors.
Companies Current Debt-to- ROE. Asset Average of
ratio. equity turnover ranking.
ratio. ratio.
Nestle India 2 3 1 4 2.50
Britannia industries 3 7 3 2 3.75
Marico 5 5 5 5 5.00
Tata Consumer products 1 8 8 8 6.25
HUL 6 1 2 1 2.50
Godrej consumer products 7 6 7 7 6.75
Dabur India ltd 4 4 6 6 5.00
Colgate- Palmolive 8 2 4 3 4.25

(The lower/earlier the average ranking the better would be the final ranking)

Companies Average of Final

ranking. ranking.
Nestle India 2.50 1
Britannia industries 3.75 3
Marico 5.00 5
Tata Consumer products 6.25 7
HUL 2.50 1
Godrej consumer products 6.75 8
Dabur India ltd 5.00 5
Colgate- Palmolive 4.25 4
From the final ranking we can see that HUL and Nestle hold 1st position and
Britannia has secured the 3rd position.
Now any portfolio must not have all the money parked in a single sector as it is risky
to do so. Thus, many analysts suggest that a portfolio must not have investments
parked in more than 2 stocks in the same industry. From the final ranking we can see
that Nestle, HUL and Britannia have a better ranking as compared to other
companies and thus we can keep them in our watchlist.
Since these stocks keep up with our set benchmarks, we can see that they have a P.E
greater than the industry P.E. This confirms that other investors also believe that
these stocks are trustworthy, safe and give good returns.
Thus, with the quantitative analysis we can keep the stocks mentioned above in our
watch list. However, the analysis doesn’t end here, we cannot invest in stocks solely
on the basis of quantitative analysis, if investing in stocks was so easy then AI would
be the best stock pickers. Thus, like we have seen the quantitative parameters of
each stock we will also do the qualitative analysis of each company. The main focus
of qualitative analysis would be on- (a) Distribution reach i.e. number of retail
outlets. (b) Brands (What brands does the company have? How well-known they
are, Are the brands are across spread across various segments?) (c) SWOT analysis.
 15

Qualitative analysis
HUL.
HUL a subsidiary company of Unilever company of England, is a no. 1 FMCG company in India. HUL
was established in 1931 as Hindustan Vanaspati Manufacturing company. In 1956 it was renamed as
Hindustan Lever ltd and again in 2007 it was renamed to Hindustan Unilever ltd. HUL had 64 brands
spread across 15 categories. These categories are- fabric solutions, home and hygiene, life essentials,
skin cleansing, skin care, hair care, colour cosmetics, oral care, deodorants, tea, coffee, ice cream &
frozen desserts, foods and health food drinks. HUL has the highest market cap. of ~5.15 lakh crore
and is a large cap company. In-fact, HUL claims that 9/10 households in India use at-least 1 of their
products. Their purpose is ‘to make sustainable living commonplace.’

HUL has 64 brands which are spread across 3 segments.

• Beauty and personal care- Axe, Dove, Lifebuoy, Lux, Pepsodent, Ponds, Rexona, Rexona deo,
Sunsilk, Tresmme, Vaseline, Closeup, Glow & Lovely, Lakme, Pears, Toni & Guy, Brylcreem,
clinic plus, Elle18, Hamam, Indulekha, Ayush Lever, Liril, Breeze, Citra, Clear, Dermalogica,
Glow & handsome, Love beauty and planet, Pure derm, Simple, V-wash plus, TIGI.

• Food and refreshment: Boost, Cornetto, Horlicks, Horlicks diabetes plus, Horlicks lite,
Horlicks mother’s plus, Horlicks nutri-gummies, Horlicks women’s plus, Horlicks protein plus,
Junior Horlicks, Knor, Lipton, Bru, Brook Bond Red lebel, 3 roses, Tazza, Taj Mahal, Kissan,
Kwality Walls, Arnnapurna, Hellmann’s, Magnum.

• Home care: Rin, Vim, Surf Excel, Wheel, Domex, Comfort, Cif, Love & care, Nature Protect,
Sunlight.

Out of these brands, HUL has brand leadership in 25 brands namely- Lux, Lifebuoy, Surf Excel, Rin,
Wheel, Glow & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe,
Simple, Love Beauty Planet, TRESemmé, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s, Horlicks and
Pureit.
HUL acquired Boost and Horlicks in 2020, which has strengthened its market position in nutrition
and health drink category.

In FY 2021-22, 16 brands have crossed Rs. 1,000 Cr sales with 2 brands – Surf excel and Brooke bond
to cross Rs. 5,000 Cr sales. Vim, Rin and Dove have also joined Rs. 2,000+ Cr club in FY 2021-22.
Infact, HUL has also introduced new products like Lifebuoy germ kill spray, Domex dis-infectant
spray, Domex Germ removal wipes, Lifebuoy clothes sanitizer and Surf Excel anti-germ wash, which
indicates that HUL is well aware of the growing segments and consumers requirements.

HUL is a top spender in marketing spending. HUL’s brands are on top of the mind recall of every
consumer in India by effectively utilizing the digital channel of marketing to create brand awareness.
HUL’s distribution reach in 2022 has been ~90,00,000 outlets. As far as their digital reach is
concerned, in 2021-22, over 8 lakh stores in India have been connected with their application named
Shikar. This app was launched in the month of December of 2020. With the help of this app the
retailers can order HUL products online anytime, anywhere. ‘U shop’, another app, where customers
can place orders for HUL products. Besides these, HUL products are also available on other e-
commerce applications. HUL products are sold in around 190 countries.

Management:

Mr. Sanjiv Mehta is the CEO and MD of HUL. He has done his
bachelors in commerce, Chattered accountancy and advanced
management program (Harvard business school). He also leads
Unilever business in south Asia (India, Pakistan, Bangladesh, Sri
Lanka and Nepal). He has been in Unilever for 29 years and has
led the business for 20 years as a CEO/chairman in parts of the
world.
 Year
2018-2022 Chairman and MD- HUL
2002-2006 Chairman and MD-
Unilever Bangladesh ltd
2007-2008 Chairman and CEO-
Unilever Philippines ltd
2008-2013 Chairman- Unilever
North Africa and Middle
East.

During his 8 years with HUL, the market cap of the company has grown from $17 Billion to $65
Billion. During this period the company has won many awards like ‘company of the year’- ET, ‘Best
governed company’- Business standard’s, ‘Corporate citizen of the year’- ET and so on. Forbes has
rated HUL the 1st most innovative company in India and the 8th most innovative in the world.

Moving on to the CFO and Executive Director of HUL, Mr. Ritesh Tiwari.
He is also the Vice President-Finance for Unilever, South Asia. He has
been with Unilever for 22 years and has led teams within India and over-
seas at Unilever. In the UK he was the Vice President-Finance, Global
Performance Management for Unilever and CFO for Unilever
International, where he is credited with bringing digital transformation,
simplification and leading projects with high business impact.

SWOT analysis:

• Strengths:

(a) HUL has in depth understanding about the consumer preference as it has a market presence of
90 years.
(b) Has strong marketing and distribution reach on both, physical and digital space.
(c) Product portfolio that serves all income groups in India. For eg: it has premium products like
Surf-excel, Taj Mahal tea, Tresemme & Dove that can serve the high-income groups population
(urban markets). On the other hand, it has mass products like Tazza, Lifebouy, Wheel, that can
serve the low-income groups of India (rural and suburban markets).
(d) Has multiple brands across all the 3 segments available in the FMCG industry, keeping no stone
unturned. It has brand leadership in 25 of the brands in its portfolio.

• Weaknesses:

(a) Presence of competitor FMCG brands.

(b) Controversies relating to Fair & Lovely are still talked about.
(c) Although the market cap of HUL is highest among its competitors, the revenue and profits of
ITC is much higher than HUL. (However, I don’t see this as a major weakness, as ITC gets
majority of its income from tobacco)

• Opportunities:
 (a) Many people in rural India are still using unbranded and cheap products. Thus, HUL has an
opportunity to grow in rural market with the mass products already available in its product
portfolio.
(b) Acquisitions, mergers and launch of new products.
(c) Although a lot of people are using HUL products, there is always a scope that the consumers
shift from normal product category to premium product category. For eg: With the increase
in purchasing power (once the inflation is under control) people who are using dove soap
bar can use dove body wash. Thus, the biggest advantage for HUL is that none of its brands
have reached the maturity stage.

• Threats:

(a) International competitors to enter the market.

(b) Competition from unbranded and local products which can hurt HUL’s market.

Over-all HUL is a well- aware of the growing segment and categories in India. Infact, it has also
launched new products like Life-boy germ kill spray, Domex dis-infectant spray, Domex germ
removal wipes, Life-boy clothes sanitizer and Surf-excel anti-germ wash booster.

HUL has also included a sustainable living plan which aims at improving the health and hygiene of
India. It is also trying to reduce the impact on the environment by reducing the CO2 emission (94%
reduction in carbon-dioxide emission in manufacturing against 2008 baseline), Reducing water
consumption (1.9 trillion liters of water conservation potential created) and reducing plastic wastage
(1.16 lakh tonnes of plastic waste collected and disposed in 2021). It is also trying to introduce re-
useable and recyclable packaging.
 Britannia Industries
ltd.
Britannia industries ltd was established in 1892 with an investment of just Rs. 295 by a group of
British men. It is one of the most trusted food and beverage company in India. It’s head-quarter is in
Kolkata and is a part of Nusli Wadia’s leadership group since 1990. Britannia’s market cap is Rs.
83,556 Cr and is a large cap company. Britannia claims that at-least one of its products reach in 50%
of India’s households. It is a No. 2 biscuit brand in UAE and is also a market leader in Nepal. In
October 2021 Britannia had invested Rs. 340 Cr to set up a new manufacturing plant in
Uttarpradesh. This will create a lot of employment opportunities in the state and would also help
Britannia to cater to the larger bakery products demand there. The commercial production in the
new plant is estimated to begin from January 2023. This expansion plan is based on the principle of
‘One new market a year’ wherein Britannia plans to expand it’s local operations in Africa and South
east Asia in the coming years.

Britannia’s product portfolio includes Biscuits, Bread, Cakes, Rusk, Dairy products, Croissants and
Crème Wafers. The name of the products are given below.

• Biscuits: Good day, Crackers, Nutri-choice, Marie gold, Tiger, Milk bikis, Jim jam + treat,
Bourbon, Little hearts, Pure magic, Nice time.
• Breads: Whole wheat bread, White sandwich bread, Bread
assortments, daily breads.
• Cakes: Gobbles, Tiffin fun, Nut and Raisins, Muffills, Layerz,
Rollyo, Fudgeit.
• Rusk: Toastea.
• Dairy products: Cheese, Milk-based beverages, Fresh
dairy, Everyday Goodness.
• Croissants: Treat Croissants.
• Crème Wafers: Treat Crème Wafers.

Good day, Marie Gold, Tiger, Nutri-choice and Milk bikis are the leading biscuit brands of
Britannia in India.

In India’s biscuit market Britannia alone has 30% market share which is much higher than its
competitors. (As per Q4 2022 management presentation)
Britannia products are found across the country and is also sold in 60 counties globally. It’s
distribution reach in 2022 has been ~25,00,000 outlets. Talking about the digital reach of Britannia
products, they are available on e-commerce sites like [Link], Swiggy instamart, Blinkit, Big
basket, Jio and Flipkart and the business from e-commerce has grown by 100% in the year 2021-22.
It also has an app for distributors named ‘BHub AW’.

Management:

Mr. Nusli Wadia is the Chairman of Britannia on 8th September,1993 and was
inducted on the Company’s Board in the same year. Mr. Wadia, a well-
known Indian Industrialist, is a Chairman of Wadia Group companies- an
Indian conglomerate involved in the FMCG, textiles, Jewellery, real estate
industries among others. He is also Director on the Board of several Indian
companies. He is the former Chairman of TEXPROCIL and also of MOA. Mr.
Wadia was appointed on the Prime Minister’s Council on Trade & Industry
during 1998 to 2004. He was the Convenor of the Special Group Task Force
on Food and Agro Industries Management Policy in September, 1998. Mr. Wadia has a distinct
presence in public affairs and has been actively associated with leading charitable and educational
institutions.

The MD of Britannia Industries ltd is Mr. Varun Berry. He holds a

graduate degree in BE Mechanical from Punjab University. He pursued
strategic management from Wharton University and global leadership
program from IMD, Switzerland. He has experience of over 27 years in
premier companies like HUL and Pepsico. He joined Britannia Industries
as a COO and Vice president in the year 2013. He has a successful track
record in start-ups, Joint ventures and growth businesses.
 Moving forward to the CFO of Britannia Industries, Mr. N. Venkatraman. He
joined Britannia in 2007 as Head of Commercial Operations. Prior to this, he
was heading the Finance functions of two-wheeler & commercial vehicle
businesses of Eicher Motors. Mr. N. Venkat heads Finance, Commercial, IT,
Legal, Secretarial, and Business strategy functions in Britannia and is also
responsible for the Company’s cost efficiency and productivity enhancement
initiatives. He is also currently leading a significant digital transformation
journey in the Company to enhance organizational effectiveness.

SWOT analysis:

• Strengths:
(a) BIL offers bakery products to all income groups and age groups, thus, getting a large
market capital in the biscuit industry. In-fact, products like cakes which are premium
items are also available at affordable prices.
(b) Market presence for 130 years, thus has experience about the consumption patterns
and consumer needs.
(c) BIL gets majority of its revenue from rural population (60% of India’s population is rural)
and only 5% of it’s revenue comes from exports, means even if there is an export stop
tomorrow, BIL need not worry about its sales and profits as it has a major market in
India.
• Weakness:
(a) BIL gets ~75% of its revenue from biscuit business which is risky.
(b) Dairy products contribute to only 5% of the revenue, as there is presence of a major
competition in this category- Amul.
(c) Many companies produce similar products. For eg: Bourbon is produced by parle and
many other local brands, this confuses the consumers and also reduces the monopoly of
BIL in certain great brands resulting to loss of profits.
• Opportunities:
(a) Although BIL has a huge competition in dairy business, this can be seen as an
opportunity. BIL can improve the quality or expand its dairy products portfolio.
(b) There is scope to venture more markets globally.
(c) The world is moving towards eating healthy and organic. BIL has the opportunity to
expand its healthy alternatives portfolio to their biscuits, breads, cakes and dairy
products.
• Threats:
(a) Competition from well-known brands (Parle) and local companies (Anmol, Priygold).
(b) Currently, an increase in price of raw materials like Palm oil and wheat, the prices of
BIL’s products will increase, this will reduce the margin and will further reduce/limit the
consumption.
 Nestle India ltd.
Nestle India ltd, a subsidiary of Nestle S.A. company based in Switzerland, is one of the largest FMCG
companies in the world. Nestle was established in 1905 with the merger of 2 rival companies, ‘Anglo
Swiss milk company’ founded by Page brothers (famous for condensed milk) and ‘Farine Lactee’
founded by Henri Nestle (famous for baby food). Nestle was the first company to introduced
powdered coffee. It began its relationship with India in 1912 by exporting condensed milk. After
1947, when the Government of India emphasised the need for local products, in 1961 Nestle set up
its first factory at Moga, Punjab, to develop the milk economy. Nestle set up milk collection centres
that would not only ensure prompt payment and fair prices, but also instil among the community a
confidence in the dairy business. The market cap of Nestle India ltd is Rs. 1,67,361 Cr and is a large
cap company.

Nestle has more than 2,000

brands spread across categories
such as beverages, chocolates,
baby foods and cereals, dairy
products and adult foods.
Famous brands among these
categories are given below.

• Beverages: Nescafe,
Nescafe latte, Nestea, Nestle
Milkmaid, Nestle Every-day, Nescafe Sunrise.
• Chocolates: Nestle classics, KitKat, Milky-bar, Munch, Bar one, Éclair, Polo.
• Infant foods: NanGrow, Ceregrow, Nestle Cerelac.
• Adult foods: Maggi 2 minutes noodles, Maggi sauces, Maggi pazzta, Nestle breakfast cereal,
Maggi Masala & Magic.

As per 2021 investors presentation, the domestic sales in:

• Dairy and nutrition products increased by 2.6%.

• Maggi products increased by 16.7%.
• Chocolates increased by 20.4%.
 • Beverages increased by 16.1%.

Nestle products are sold across 189 countries. As per 2021 reports, Nestle has ~ 45,00,000 outlets in
India. The company is aspiring to reach 140 million more households by the year 2030 which is a
clear indication of growth potential for the company. Nestle is targeting to reach 1,20,000 villages in
next 2-3 years as the rural sales contributed to 25% of the total sales in 2021. The picture given
below talks about the market share of Nestle products, majority of its products have a market share
of more than 50%.

Management:
The Chairman and MD of Nestle India ltd is Mr. Suresh Narayanan.
He pursued his Master’s degree in economics from Delhi school of
Economics. He also holds a Diploma in Executive development from
IMD. He has over 30 years of experience in the FMCG industry and
has also held Senior management and top leadership roles in leading
global companies. Mr. Narayanan joined Nestlé in 1999 as Executive
Vice President for Sales in India, where he made major strategic
changes in Sales and Customer Management and also set up the
chilled dairy business. In 2003, he moved to Nestle Indochina, as an
Executive Director for Sales, Marketing and Food-Services, covering
the countries of Thailand, Cambodia, Myanmar, Laos and Vietnam. Two years later, he returned to
India as head of Sales for- India, Sri Lanka, Bangladesh and Nepal. In 2008, Mr. Narayanan was
appointed as Managing Director of Nestlé Singapore Ltd., and remained there until 2010. During his
time the overall business in Singapore witnessed sustained growth amidst the economic downturn.
He was awarded the Medal of Commendation by the Government of Singapore in 2010, for
excellence in employee relations during this challenging period. Mr. Narayanan began his career as a
management trainee with Hindustan Unilever, where he held numerous positions of increasing. He
has also worked with Colgate Palmolive in India.

The CFO of Nestle India ltd is Mr. Shobinder Duggal. He graduated

from St. Stephens College, Delhi University. He is a Chartered
Accountant and an Economics (Hons). He has also attended Executive
development program at IMD, Lausanne. He has 29 years of work
experience with Nestlé. Before becoming the CFO in 2004, Mr. Duggal
handled various responsibilities in Nestlé India Limited, including Vice
President Corporate Control, Head of Internal Audit and some
important assignments at the Nestlé group Headquarters in
Switzerland. He is also on the Board of Nestlé Lanka PLC since January
2014.

SWOT analysis:

• Strengths:
(a) Nestle has around 8,000+ products across various categories to cater different demands.
(b) Has market presence of 109 years, thus, has great knowledge about the consumption
pattern.
(c) Is the 34th largest company in the world as per Forbes.

• Weaknesses:
(a) Even-though Nestle is a big company, with more 2,000 brands and 189 countries as its
market, it has been a part of many controversies in the past. ‘Contaminated food’ recall
such as Maggi.
(b) Criticism over high water usage, forced child labour and human trafficking carried out in
the Cocoa business of Nestle.
 (c) 60% of Nestle products are unhealthy (as per an internal report published in 2020) and
cannot be made healthy even after trying. However, Nestle has been trying to update its
‘nutrition and health’ strategy and is also updating its internal nutrition standard.

• Opportunities:
(a) Growth in ready-to-drink tea and coffee market.
(b) Growth in demand of for healthy foods, giving Nestle a chance to increase its ‘healthy
foods’ portfolio which acts as an opportunity to make people forget about the
controversies.

• Threat:
(a) Cut-throat competition in beverage and food industry.
(b) Global warming and adverse climatic conditions the affect the coffee produce of Nestle.
 Marico Industries ltd.
Marico Industries limited is one of India’s leading consumer goods companies operating in global
beauty and wellness category. It started on 13th October 1988 as Marico Foods Limited and was
renamed to Marico Industries Limited in 1989. In 1990, Marico took over a 40 years old company
that produced consumer good-Bombay Oil Industries, and since then Marico has done 13
acquisitions. It’s head-quarter is in Mumbai and in 1992 Marico set up its first international office in
Dubai. It has a market cap of Rs. 63,056 Cr and is a large cap company. Marico claims that 1 out of 3
households in India use at-least one of their products and 118+ million households in India use
Marico products.

In total Marico has 26 brands across 6 categories which are mentioned below.

• Coconut oil: Parachute, Parachute

advanced, Nihar naturals, Oil of Malabar,
Coco soul- edible coconut oil.

• Hair nourishment products: Hair and care,

Livon, Pure sense, Coco soul beauty, True
roots.

• Healthy foods: Saffola oil, Saffola

ImmuniVeda, Saffola Fittyfy Gourmet, Coco
soul.

• Male Grooming: Set Wet, Parachute advanced men, Beardo, Jatta.

• Hygiene: Mediker, Veggie clean, House protect and travel protect, Keepsafe, Travel Protect.

• Skincare and fabric care: Kaya youth, Pure sense, Parachute advanced body lotion, Revive.

Company has 62% market share in Coconut oil (parachute), 76% market share in super premium
refined edible oils (Saffola), 59% market share in male grooming products and 35% market share in
hair care products. Overall, the company has a good brand portfolio.
Marico has more than 53,00,000 outlets in India as of 2021. The rural sales has increased to 33% in
2021 as compared to the 26% in 2010. The e-commerce reach has increased to 22% in 2021 as
compared to the 7% in 2012.

Marico also has presence in 25 countries in the emerging markets of Asia and Africa such as Egypt,
Middle east, Vietnam, Myanmar, India, Bangladesh, South Africa, etc.

Swot analysis:

• Strengths:
(a) Majority of Marico brands have been diversified. Saffola started as a refined oil brand
but now it has salt, oats, oodles
(b) Low competition in Men’s grooming sector.
(c) Brands focusing on niche markets. For eg: Saffola focusing on heart health, Parachute
focusing only on coconut oil, Mediker focusing on lice removal.

• Weaknesses:
(a) Failed products in the past have proven to be costly for the company, resulting to losses.
For eg: Parachute hot oil, Saffola snacks.
(b) Inability to establish a premium image in the market.
• Opportunities:
 (a) Expansion in emerging markets can be beneficial for the company rather than focusing
on established markets.
(b) Expansion in men’s grooming as now a days men are also concerned about look and are
opting for beauty products.
(c) Now is the time where people are looking for healthy snack options, so in the future the
company can re-introduce healthy snacks.

• Threats:
(a) Competitors offering better products or products in the similar category.
(b) Increasing demand of premium products due to increase in purchasing power of the
consumers.

Management:

Mr. Saugata Gupta is the CEO and MD of Marico ltd. He joined

Marico in 2004 as a sales head and became the CEO in 2007. In
2014 he took over the position of MD of Marico ltd. Under his
guidance, Marico has expanded its presence in 25 countries in
emerging markets of Asia and Africa. He was ranked #4 and #47 in
the FMCG sector and Pan-India respectively in the Business
Today-PWC list of India’s Top 100 CEOs in 2017 and was ranked as
‘India’s Most Valuable CEOs’ by Businessworld in 2016 and 2018.
He pursed Master’s in business administration from IIM-Bangalore
and pursed chemical engineering from IIT-Kharagpur. Outside Marico, he is an independent director
of Ashok Leyland.

The CFO of Marico ltd is Mr. Pawan Agarwal. He is a Chartered

accountant and a [Link] (Hons) graduate from St. Xavier’s
college Calcutta. He has 20 years of experience in various
finance verticals in FMCG domain. He has worked with Marico
for 16 years and contributed in areas of Business Finance,
Strategy Business planning, Cost optimisation, International
Business operations, setting up Internal Control architecture,
Business Process Transformation and major Taxation
transition. Prior to Marico, he worked with Eveready
Industries limited for 4 years. In his 20 years of long career, he has had successful stints in areas of
Business Finance and Corporate Finance. Backed by strong leadership skills and experience of
managing diverse people, he has managed operations comprising both scale & complexity and has
driven transformational change agenda for the organisation.
 Tata consumer
products ltd.
Tata Consumer Products Ltd was founded in 1962 and its head-quarter is in Mumbai. TCPL is one of
the top 5 companies of India in FMCG industry. It is India’s largest tea company and the world’s
largest tea company. Earlier known as Tata Global Beverages Limited, Tata Consumer Products was
formed when the consumer products business of Tata Chemicals merged with Tata Global Beverages
in February 2020. As per 2022 reports, TCPL gets 64% of its revenue from India. It has the highest
coffee produce in India.

It has brands across 5 segments which are mentioned below.

• Tea:
Tata tea, Tetley, Good earth, Teapigs, Vitara.

• Coffee:
Tata coffee, Eight O’clock and Sonnets by tata consumers.

• Foods:
Tata Salt, Tata Sampan, Tata soulful and Tata Q.

• Liquid beverages:
Mineral water Himalaya, Tata Gluco+, Tata Copper plus water, Tata Fruski.

• Coffee shop: Tata Starbucks.

Tata tea and

Tata salt are
nd
market leaders in India. Tetley tea is the biggest selling brand in Canada and the 2 biggest brand in
U.K. and the U.S. Eight O’clock coffee works well in U.K. Tata Starbucks which is a Joint venture of
Starbucks Co. and Tata Consumer products Ltd has 185 outlets in the country and is still growing.
Tata Sampan is still a growing brand in India.

As of 2022, the company’s products reach ~25,00,000 retail outlets, In-fact, TCPL claims that 200
million households in India use at-least 1 TCPL’s product. Besides India, the company has its
presence in Canada, U.K., U.S.A., Middle East, South Africa and Australia.

SWOT analysis:

• Strengths:
(a) Leading position in necessities i.e. tea and salt.
(b) Brand leadership in international market.
(c) Gets majority of revenue from India, thus, less of worry if there are export restrictions.
(d) Premium brands in certain categories, to cater to the brand conscious population.
• Weaknesses:
(a) Some promoters have pledged their stakes.
(b) Focus more on tea and coffee, which involves a risk of concentration.
(c) Criticized for poor working conditions, low wages and gross human rights violations in a
report released by Human Rights Institute at Columbia Law School in 2014-15.
• Opportunities:
(a) Increase international and rural reach.
(b) ‘Ready-to-eat foods’ market is growing slowly, giving growth opportunities for TCPL.
(c) Healthy food products demand is increasing giving a new market to explore.
• Threats:
(a) Competition from new and existing brands.

Management:

The CEO and MD of Tata Consumer Products ltd is Mr. Sunil D’Souza.
He became the CEO and MC in 2020. Prior to this he worked as a MD
in Whirlpool India ltd. Prior to joining Whirlpool he worked at Pepsi
Co. ltd for 15 years, where he held many leadership roles. He began
his carrier at HUL in 1993 and has a rich experience of 29 years in the
FMCG industry. Mr. Sunil is an engineer from University of Madras and
is an alumnus of IIM- Calcutta.

The CFO of TCPL is Mr. L. Krishnakumar. He started his career as a

management consultant A. F. Ferguson & Co. He has also worked as
a General manager of L&T, where he gained exposure to the field of
Engineering. Mr. L. Krishnakumar joined the Tata group in hotel
business as a Vice president -Finance in 2000 and was appointed as a
senior VP- Finance of erstwhile Tata tea in India in 2004. During his
tenure he has handled different roles for the company in India and
U.K. He is qualified in Chartered accountancy, Cost accountancy and
Company Secretarial.
Mr. N. Chandrasekaran is the chairman of the board at Tata
Sons since 2016. He was appointed as the chairman on January
2017. He also chairs the Boards of several group operating
companies including Tata Steel, Tata Motors, Tata Power, Air
India, Tata Chemicals, Tata Consumer Products, Indian Hotel
Company, and Tata Consultancy Services – of which he was
Chief Executive from 2009-17. In addition to his professional
career at Tata, Mr. Chandrasekaran is on the International
Advisory Council of Singapore’s Economic Development Board.
He is the Chairman of the Indian Institute of Management, Lucknow as well as the President of the
Court at the Indian Institute of Science, Bengaluru. He has been conferred with the Padma Bhushan
in the field of trade and industry in 2022. He has been awarded several honorary doctorates by
leading Universities in India and internationally, including an honorary Doctor of Letters from
Macquarie University, Australia, an honorary Doctor of Science by the Aligarh Muslim University, and
a Doctor of Letters from the Regional Engineering College, Trichy, Tamil Nadu, where he completed a
Master’s degree in Computer Applications before joining TCS in 1987.

Godrej consumer
products ltd.
Godrej consumer products is a leading emerging market company. Earlier, it was a soap
company and was known as ‘Godrej soap Company’ which was later on named as ‘Godrej
Consumer Products ltd’. It was founded in 2001 and is a part of the 125 years old Godrej
group. GCPL is the largest haircare, insecticide and air care player in emerging markets like
India, Indonesia and Africa. It’s head-quarter is in Mumbai. GCPL has around 1.2 billion
consumers as of 2022. Their soap brand ‘Chavi’ launched in 1918, was the world’s first soap
brand to make soap without animal fat. Ever since it’s formation, GCPL has acquired many
international brands such as ‘Keyline brands ltd’ in 2005, ‘Rapidol ltd’ in 2006, etc. Godrej
consumer products has a market cap of Rs. 78,800 Cr and is a large cap company.

Talking about brands, Godrej consumer products has more than 10 brands across 3 major
segments which are mentioned below.

• Hair care:
Godrej expert hair colour, Blunt, Nupur, Godrej professionals, Darling, Infecto, Mega growth,
Ilicit, Issue, TCB naturals, Renew, Just for me, Roby, NYU, African pride.
• Home care:
Goodnight, Godrej aer, HIT, Ezee, Stella air freshner.

• Personal care:
Saniter, Godrej No. 1, Cinthol, Protekt, Pamelargant beauty, Villeneuve, Millefiori, Mitu,
Purest hygiene, [Link].

Goodnight is a No.1 brand in its category in India, Darling acquired with 51% stakes in 2013,
is a No.1 brand in its category in America. Godrej aer and Cinthol are No. 2 brands in their
respective categories.

GCPL gets 49% of its revenue from home care, 20% from personal care and 31% from hair
care. It has been diagrammatically represented.
Revenue
20%
49%

31%

Home care Hair care Personal care

Talking about its reach, its products are available in ~13,00,000 outlets as of 2022 and is also
very much available on big e-commerce sites like Amazon and Flipkart. Besides India, CGPL
has its presence in 90+ countries including emerging markets like Indonesia, Latin America,
Africa and Middle east.
Revenue In-fact, GCPL’s brands
have market leadership
in these emerging
markets (India, Latin
America and
Indonesia). It get 54%
of revenue from India,
24% from Africa+ USA +
Middle east, 17% from
India Africa+ USA + Middle east Indonesia Latin America Others
Indonesia and 4% from
Latin America.

Swot analysis:

• Strengths:
(a) GCPL is a part of ‘Godrej groups’ which has market presence of more than a century.
(b) Brand leadership in international market as well
(c) Has Products to cater all income groups. For eg: Godrej expert hair colour is an
inexpensive product while Godrej professionals is a premium product making it
expensive.

• Weaknesses:
 (a) Limited reach in international market.
(b) High competition from well known brands of HUL, Dabur, Marico, etc
(c) Low market share due to competition.

• Opportunities:
(a) Expansion in international by increasing presence and in domestic market by improving
portfolio.
(b) Increasing the rural market reach.

• Threats:
(a) Competition from unbranded and local brands in certain product categories.

Management:

Nisaba Godrej is the Chairperson of GCPL. She is also the

Chairperson of Teach for India and sits on the board of Godrej
Agrovet, Bharti Airtel, Mahindra and Mahindra and VIP Industries.
She has a BSc degree from The Wharton School at the University of
Pennsylvania and an MBA from Harvard Business School. She has
over seen many projects in innovation, HR and strategy for Godrej
and its associate companies.

The MD and CEO of GCPL is Mr. Sudhir Sitapati. Prior to

joining GCPL, Mr. Sudhir was an executive director of HUL
for 22 years. Under his leadership, HUL built its Foods and
Refreshments business as one of the largest businesses in
India. This included the USD 5 billion merger and integration
of GlaxoSmithKline Consumer Healthcare with HUL, the
largest deal of its kind in the FMCG sector in India. In his
previous roles, Sudhir was instrumental in creating a world-
class Tea business for HUL in India and leading HUL’s Soaps
business in the country. He has pursued MBA from IIM- A
and is a B. Sc graduate in maths and Economics from St. Xavier’s College, Mumbai.

Mr. Samir Shah is the CFO of GCPL has been with GCPL for
15 years. During this period, he has assumed many
leadership roles in the company. Before joining GCPL, Mr.
Samir worked at PepsiCo and General Mills. He is
Chartered accountant by profession and has also
specialized in treasury management from Institute of
Charted financial Analyst.
 Dabur India ltd.
Dabur India limited, incorporated in 1936, was established by Dr. S. K Burman in 1884 at Kolkata.
Dabur is the 4th largest FMCG company in India and is focused on selling and producing ayurvedic
products and targets the masses. With a legacy of 138 years Dabur is India’s most trusted brand and
the world’s most trusted ayurvedic and natural health care company. In 2005, Dabur acquired 3
companies under the ‘Balsara Group’ which has well known brands like Babool, Meswak, Odomos,
Odonil, Odopic and Promise toothpaste. In 2009, Dabur acquired ‘Fem care pharma’ for 260 Cr.
Dabur India Limited has a market cap of more than Rs. 1,00,000 Cr. and is a large cap company.

Dabur has more than 250 products under various segments. We’ll be looking at the mostly used
brands under these 3 segments.

• Health care:
Dabur chyawanprash, Dabur honey, Dabur Glucose-D, Dabur pudin hara, Dabur nature care,
Dabur Hajmola.

• Oral care:
Dabur Red paste, Meswak, Dabur babool, Dabur lal danth manjan, Dabur ayurvedic paste.

• Hair oils and shampoo:

Dabur Amla and Vatika.

• Skin care:
Fem, Dabur Gulabari, Oxy bleach.

• Foods:
Real juices.

• Home care:
Odomos, Odonil and Odopic.

The company has brand leadership in Dabur Chyawanprash, Dabur Honey, Dabur Pudin hara, Dabur
honitus and Real. Vatika is an international power brand. As per an article published in Business
India magazine, over 6.3 billion spoons of dabur chyawanprash are consumed daily in India, over 2
million glasses of Real juice are consumed daily in India. Over 31 million tablets of Hajmola are
consumed daily in India and Over 8.8 million champis with Dabur amla oil are done daily in India.

Dabur products are available in rural and urban areas in India and have a distribution reach of
~67,00,000 retail outlets as of 2022. It also has a good e-commerce reach on the famous commerce
apps. Besides India, Dabur has established its presence in more than 120 countries and ~27% of the
revenue comes from overseas market. Dabur has ~30,00,000 outlets in ~6o countries other than
India.

SWOT analysis:

• Strengths:
(a) Dabur has products to cater all age groups. For eg: Chyawanprash of old people, beauty
products like dabur Gulabari for young people and Real juices for children.
(b) Rich market experience due to a strong market presence of 138 years.
(c) International presence in 120 counties with 3 million outlets in ~60 countries.
• Weaknesses:
(a) International competition in toothpaste industry. For eg: Colgate.
(b) Competition from other FMCG brands in home care and food industry. Competition
from many unbranded and local products.
• Opportunities:
(a) Expansion in International market.
(b) People are slowly returning back to ayurvedic products offering Dabur a larger market in
future.
• Threats:
(a) Competition from other unlisted companies who are focused on ayurvedic products. For
eg: Patanjali, Zandu, Hamdard.

Management:

The CEO and MD of Dabur India ltd is Mr. Mohit Malhotra. He joined Dabur in
1994 and was assigned the key segments in marketing and sales. He was a
CEO of Dabur international based out in Dubai before becoming the CEO of
the company in 2019. He is a Management Graduate from Pune University
and holds Executive Masters in International Business from Indian Institute of
Foreign Trade, New Delhi.

Mr. Ankush Jain is the CFO of Dabur India ltd. He joined Dabur in 2016 as a vice
president- Finance and then in 2021 was appointed as the CFO. Before working at
Dabur Carlsberg India as an associated Finance director. He has 20 years of rich
experience of working in renowned MNC’s like GSK, Pricewaterhouse, Carlsberg
and now Dabur. He is a Chartered Accountant and has completed his B. Com
(Hons) from Delhi university.
 Colgate-Palmolive
India ltd.
Colgate-Palmolive India ltd is a subsidiary company of an American consumer products company-
Colgate-Palmolive whose headquarter is in New York city. It was started by Mr. William Colgate in
1806 as a soup and candel factory. In 1857, Mr. William died and the soap factory was now known as
Colgate and Company under the management of Mr. Samuel Colgate, son of Mr. William Colgate. In
1873, the company introduced its first toothpaste brand ‘Colgate toothpaste’ and was available in a
jar. In 1896, the toothpaste was available in tubes, named as Colgate Ribbon Dental care and was
available for mass sales in 1908. Palmolive was a B.J. Johnson company which sold palm oil and olive
oil soaps. After the merger of the Johnson company and the Peet company, in 1928 the Palmolive-
Peet company acquired Colgate company to create Colgate-Palmolive-Peet company. In 1953, Peet
was dropped from the name leaving the current name of the company as ‘Colgate-Palmolive
Company’. The Company produces and sells oral care and home care products. Colgate-Palmolive
India ltd was incorporated in 1937 and in 1983 launched their 1st Colgate toothpaste in India.

It has brands across categories like tooth brush, toothpaste, toothpowder, body wash and hand
wash.

Some of the known brands are: Colgate,

Colgate Ved-shakti, Colgate salt, Colgate visible
white, Colgate brushes for kids, Colgate brushes
for adults, Colgate danth-manjan, Colgate
mouth wash, Palmolive foaming handwash,
Halo nourishing shampoo+ conditioner.
In the toothpaste segment the company has a market share of 51%, thus having a market
leadership. In the toothpowder segment the company has a market share of 48% and the market
share in toothbrush segment is 30%. In the soap segment the company is still growing.

Market Share

30% 51%

48%

Toothpate Toothpowder Toothbrush

The products of this company are available in more than 200 countries and has a good market reach.
It is easily available on e-commerce sites, retail stores, malls, supermarkets. It is also easily available
in the rural markets in India. It is available in 62,80,000+ retail outlets in India which cover both,
rural and urban markets.

SWOT analysis:

• Strengths:
(a) Market leader and specialization in oral care.
(b) Great market presence in Indian and international market.

• Weaknesses.
(a) Competitor brands that also specialize in oral care. For eg: Pepsodent.
(b) Poor diversification of product portfolio giving low returns and is risky.

• Opportunities:
(a) Mergers and acquisitions to strengthen the portfolio.
(b) Increasing rural reach.

• Threat:
(a) Competition from other established FMCG companies having a great market share in the
soap industry.
(b) Competition from other local brands.
Management:

Mr. Ram Raghavan was the CEO and MD of Colgate-Palmolive India ltd and has
been promoted president, Enterprise oral care, Colgate-Palmolive Company, on
April 2022. Effective from 1st September,2022, Mrs. Prabha Narasimha will be
the CEO and MD of Colgate-Palmolive India ltd. She has been an executive
director of HUL since 2020. She was the Vice president- skin care and hair care,
since 2015 at HUL. She pursued MBA from IIM-B.

The CFO of Colgate-Palmolive India ltd is Mr. M.S. Jacob. He joined the
company in 1995 in the Continuous Improvement Group. Over the course
of 23 years, Mr. Jacob served through leadership roles in Finance at
Colgate-Palmolive Company’s subsidiaries in India, Thailand, Vietnam, and
Malaysia as well as at the Asia Pacific Division Head Quarters in Hong Kong.
Prior to joining the position of CFO, he was Finance Director of Colgate-
Palmolive Malaysia Group where he led several key initiatives including the
local execution of the Global Growth Efficiency Program and a successful
transition to the Goods & Services Tax. Mr. Jacob pursued Bachelor of Commerce Degree from
Mumbai University and is a Chartered Accountant from the Institute of Chartered Accountants of
India.

Now, since we have a brief understanding of each company we need to select 2 companies that we
can invest in from the 3 companies that are in our watch list. For selecting the companies, we will
need some parameters to make the decision. The parameters that I will be using in this project are
explained below.

• Distribution reach:

It is not really difficult to make a product but what is difficult is distribution. A company’s distribution
reach is said to be good when its products are available at every nook and corner of the
country/state. Since FMCG products are used on a day-to-day basis, the prices of such products
cannot be high, thus to earn profits the FMCG companies have only one option and that is to reach
as many outlets as they can- to expand their distribution reach. Moreover, as per the porters 5 force
model, the FMCG industry has a lot of substitutes, thus if an FMCG company has a weak distribution
reach and does not reach the outlets on time, the company will loose upon their customers which
intern affects their profits.

Thus, more the no. of outlets reached the better is the distribution reach and so is the ranking.

Company Outlets Rank

reached as of
2022.
HUL ~90,00,000 1
Nestle India ~47,00,000 2
Britannia ~24,90,000 3
(Source- Company presentation and annual report)
 • No. of Brands in India:

Multiple brands help in have catering to a diverse population as per their needs. Multiple brands
also helps a company to spread out its financial risk and also provides multiple avenues of cash-flow.
Thus, more the no. of brands the better is the ranking of the company.

Company No. of brands Rank

HUL 64 1
Nestle India 20 3
Britannia 29 2

(Source- Company website and economic times)

• Market experience:

More years of market experience helps a company to have an in depth understanding of

customers preference and needs. Thus, with changing times and needs the companies with
more years of experience can easily cater to such demand. Thus, a company with more years of
experience the better will be the ranking.

Company No. of years Rank

HUL 90 3
Nestle India 109 2
Britannia 130 1

(Source- company website)

• Market share (as of 2020):

In simple words, market share is the percentage of total revenue generated by a company. The
higher the market share the better is the ranking.

Company Market share Rank

in %
HUL ~51 1
Nestle India ~15 2
Britannia ~12 3

(Source- Annual report)

 • No. of controversies:

Lesser the no. od controversies the better it is for the company and better the ranking.
Controversies can affect the sentiments of the market and investors find the company working with
less controversies to be more
reliable. Company No. of Rank
controversies
HUL 4 2
Nestle India 11 3
Britannia 3 1

(Source- Wikipedia)

From all these rankings we will give a finanl ranking on the basis of the average ranking.

Company Distribution No. of Market Market No. of Average Rank

reach brands in experience share. controversies ranking
India (as of
2020)
HUL 1 1 3 1 2 1.6 1
Nestle India 2 3 2 2 3 2.4 3
Britannia 3 2 1 3 1 2 2

From the final ranking we can see that HUL and Britannia is a good company to invest in.
 Conclusion- My views.
From the qualitative and quantitative parameters, the 1st stock that I would suggest to invest in is
HUL. HUL, from its financials has proven that it can stand strong even in tough times. In-fact, as
compared to all the other FMCG companies, HUL has the highest distribution reach. The company
has brands across all the three segment which cater to both rural and urban market which denotes
that the business has longevity and has good preparedness for critical circumstances. In short, the
company doesn’t leave any stone unturned.

The 2nd stock that I would suggest is Britannia. Even-though some quantitative parameters of the
company do not fulfil the set benchmarks, like the debt-to-equity ratio is 0.96 in 2022 which is ~1,
the profit saw a downward trend for FY 2021-22, even-though the sales saw an upward trend. This
may be because of the huge investment done by Britannia in their new plant in Uttar-Pradesh. All
the other parameters seem to be fine. Now, the main question here is why Britannia over Nestle?
The first reason is that Britannia has ~95% of its revenue from India, this means that its more market
to capture, thus more room for growth also if there are any export barriers, Britannia can survive as
it gets majority of the income from India. Secondly, in 1977, a boycott was launched in U.S. against
Nestle due to the company’s aggressive advertisement of infant formula, a substitute for breast
milk. Due to this the company not only had to face huge losses but also has had to face a bad
reputation in the market. Moreover, people are now very much concerned about their health and
well-being, thus the consumers want quality food that does not have led but if we look at Maggi’s
case, people till date associate Maggi with ‘led’. Looking all these controversies of Nestle, I would
not suggest Nestle and would rather go in for Britannia, a company that gives good returns and has a
good market image. In-fact, as per statistics, 99.6% people in India consume biscuits. So, even
though Britannia get ~75% of its income from the biscuit industry, I do not see it as a major concern
as we do have a huge market, at-least in India, for biscuits.

Let’s see at what price must we enter these stocks. For this we’ll use the formula of
target price.
Target price = Forecasted EV
No. of outstanding shares.
Where, Forecasted EV = EV * Expected EBITDA -1

EBITDA
Expected EBITDA = EBITDA + CAGR% in EBITDA of last 5 years.

Britannia HUL
EV/EBITDA 33.69 37.06
Expected EBITDA 2,423 13,076
Forecasted EV 79,841 4,84,601
No. of outstanding shares (in Cr) 24.09 234.96
Target price per share 3,314 2,062
So now, we have the target for each stock that was under our watchlist, but is it safe to rely
completely on the target price? Aren’t there any chance that our forecasted target price may change
due to some event happening in the future? Since the future is uncertain, we will keep a risk margin.
I personally keep a risk margin of 25%. This we will invest/enter the stock when the price reaches
2/3rd i.e. 75% of its target price.

Britannia HUL
Entry price per share 2,486 1,547
 References.
• [Link]
in-stocks/

• [Link]

• [Link]
0goods%20(FMCG,growth%20drivers%20for%20the%20sector.

• [Link]

• [Link]

• [Link]

• [Link]