Retail Investors In Fmcg
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Retail Investors In Fmcg

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The presentation highlights the prospects and issues of FMCG sector and bringsout the Do's and Dont's for retail investors in FMCG Stocks.

The presentation highlights the prospects and issues of FMCG sector and bringsout the Do's and Dont's for retail investors in FMCG Stocks.

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  • 1. Retail Investors-Opportunities ad Challenges in Indian FMCG Market Nazia Sultana Assistant Professor Osmania Univeristy Email:01.nazia@gmail.com
  • 2.
    • Discussion Outline
    • India at a glance
    • FMCG market in India
    • FMCG Sector- Prospects
    • FMCG Sector- Issues
    • Investing in FMCG Stock- Do’s
    • Investing in FMCG Stock- Don'ts
    • Conclusion
  • 3.
    • India at a glance
    • Over 867 million below the age of 45 years
    • More English speaking people
    • 300 million middle class “real consumers”
    (Source: www.rbi.org.in -Budget 2007-08) 170 billion USD Foreign exchange Reserves 4.5% Inflation 9.1% GDP Growth rate 740 billion USD GDP 1.1billion Population
  • 4. FMCG Market in India “ Today, the disposable incomes of the India’s top-end consumers are no different from the consumers of Europe” - Chander Mohan Sethi, MD, Reckitt Benckiser FMCG is the fourth largest sector in the economy with a total market size of US $ 13.1 billion ( Source: www.investorfriend.com )
  • 5. What does FMCG mean? FMCG refers to consumer non-durable goods required for daily or frequent use. Products : Detergents, Toilet soaps, toothpaste, shampoos, creams, powders, food products, confectioneries, beverages etc., Players: HLL, P&G, Dabur, Reckitt Benckiser, L’oreal etc.,
  • 6.
    • FMCG Sector- Prospects
    • An Average Indian spends around 40% of his income on groceries and 8% on personal care products
    • Growth of MNC in the sector
    • Account for no less than 8% in the NIFTY
    • Merlion India Fund, managed by Standard Chartered Private Equity, identified Indian FMCG sector as its priority investment area
    • Increase in rural households
  • 7.
    • FMCG Sector- Issues
    • Strong presence of unroganised sector
    • High entry barriers –intensity of competition
    • Limited mass media options available to build brand
    • Products lack high usage a compared to international standards
    • Counterfeiting
  • 8.
    • Investing in FMCG Stock-Do’s
    • Look at the shaper’s (innovator’s) who are proactive to market needs and have strong, efficient and intelligent distribution channels
    • Choose between MNC and Indian company based on growth prospects, target returns and tax incidence
    • Look for signs of coordinated price hikes
  • 9.
    • Investing in FMCG Stock-Do’s (Contd)
    • Invest in stocks whose manufacturing facility is set up in excise and tax free zones
    • Have an eye regular buyback programmes e.g. those adopted by the Britannia and Godrej which keep prices steady
    • Look at the company’s cash flows and working capital efficiencies to have an idea about the company’s bargaining power; Return ratios(like ROCE), P/E ratio etc.,
  • 10.
    • Investing in FMCG Stock-Don’ts
    • Don’t bundle all FMCG stocks and treat them as one sector
    • Don’t get influenced by the negative surprises such as price wars
    • Don’t invest in companies which do not have access to a low-cost manufacturing base
  • 11. Mixed bag for FMCG stocks HLL, Henkel, dabur India and Procter& Gamble posted modest decline in their share returns. Cadbury India, Nestle India, ITC found themselves in the winners list.( Source: ‘Markets end in red-FMCG stock outperform- CNBC Tv18, July 2007)
  • 12. Conclusion relevant and practical tools of evaluating the effectiveness of one’s investment. Alertness Analytics Approach Appreciation
  • 13. Thank you