FMCG Sector Fundamental Analysis Report

Project Report on
Fundamental Analysis
on “FMCG Sector”
Sahil Aggarwal
18DM175
PGDM (Finance)

DECLARATION
I SAHIL AGGARWAL OF Birla Institute of Management Technology, hereby declares
that this project report “Fundamental Analysis of FMCG Sector” has been carried out by
myself under the supervision of ProfessorAmrendra Pandey
The data present in the report is original and not copied from anywhere.
SAHIL AGGARWAL
PGDM (Finance)

ACKNOWLEDGEMENT
I have a great pleasure submitting this project report on “FundamentalAnalysis of FMCG
Sector”
In preparation of this report, I had to take the help and guidance of some respected persons,
who deserve my deepest gratitude. As the completion ofthis report, I would like to showmy
gratitude to Mr. Amrendra Pandey, Assistant professor at BIMTECH, for giving me
direction and guidelines throughout number of meetings.
I would also like to thank all thosewho directly or indirectly helped me in writing this project
report.

CERTIFICATE
This is to certify that, Mr. SAHIL AGGARWAL of PGDM (Finance), has completed
the project work entitled ‘FUNDAMENTAL ANALISYS OF FMCG SECTOR' during
the academic year 2018-20, in partial fulfillment for the award of the degree of POST
GRADUATION DIPLOMA IN MANAGEMENT, BIRLA INSTITUTE OF
MANAGEMENT SCIENCES, under my guidance and supervision
Prof. Amrendra Pandey
Assistant Professor
BIMTECH

EXECUTIVE SUMMARY
Investment decision is a very important decision of everyone’s life. Some people often get
confused as in which sector to invest or which company will give best returns in future. To
solve this problem to an extent I have done the Fundamental Analysis of FMCG Sector. To
carry out this research, I have chosen top five FMCG companies based on their market
capitalization and analyzed them over their past 5year data, and interpreted whether the
company is fundamentally strong or which company or a set of companies is best to invest
your money.
For the analyzing purpose I have chosen Ratio analysis because it simplifies complex
accounting statements and financial data into simple and understandable ratios which makes
it easy for investor to analyze the company and also helps management to identify problem
related areas so that they can work on them.
I have compared these 5 companies over their 5 years past data and commented that which
company is good and which is bad. This report also covers the overview of FMCG sector
and its journey and also its future prospects.

INDUSTRY OVERVIEW
Overview of Fast Moving Consumer Goods (FMCG)
Fast-moving consumer goods (FMCG) sector is the 4th largest sector in the Indian
economy with Household and Personal Care accounts for 50% of FMCG sales in
India. The main growth driver for this sector is rising awareness and change in
lifestyle of consumers. The urban segment is the largest contributor to the overall
revenue generated by the FMCG sector in India (accounts for 55% revenue share)
However, in the last few years, the FMCG market has grown at a faster pace in rural
India compared with urban India
Each household personspends majorly on FMCG products monthly. The volume of
money that flows against FMCG productin the economy is very high as the number
of consumers of FMCG product are huge in number and also there are large number
of competitors in the market making it impossible to earn abnormal profits.
FMCG industries work heavily on distribution network. Because they want their
productto reach every nook and corner of the country or the world. If any new player
who wishes to enter the market have to spend heavily on distribution and promoting
brands as there are many other set players in the market.

FMCG Market Size
The Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$
840 billion in 2017, with modern trade expected to grow at 20 per cent - 25 per cent
per annum, which is likely to boost revenues of FMCG companies. Revenues of
FMCG sector reached Rs 3.4 lakh crore (US$ 52.75 billion) in FY18 and are
estimated to reach US$ 103.7 billion in 2020. The sector witnessed growth of 16.5
per cent in value terms between July-September 2018; supported by moderate
inflation, increase in private consumptionand rural income. Penetration level as well
as per capita consumptionin mostproduct categories like jams, toothpaste, skin care,
hair wash etc in India is low indicating the untapped market potential. Burgeoning
Indian population, particularly the middle class and the rural segments, presents an
opportunity to makers of branded products to convert consumers to branded
products. Growth is also likely to come from consumer 'upgrading' in the matured
productcategories. With 200 million people have shifted to processed and packaged
food by 2010, India needs around US$ 28 billion of investment in the food-
processing industry. At present, urban India accounts for 66% of total FMCG
consumption, with rural India accounting for the remaining 34%.
31.6 33.3 35.7 38.8
43.1
49 52.8
68.4
83.3
103.7
0
20
40
60
80
100
120
2011 2012 2013 2014 2015 2016 2017 2018 2019F 2020F
Revenues over the years (US
$billion)

FMCG: THE INDIAN JOURNEY
The FMCG sector in India is standing like Mammoth at fourth largest sector in the
Indian economy. This sectorincludes global businesses, well established distribution
network and intense competition between organized and unorganized players. As the
sector is this big in India, the availability of raw material is easy and cheap labor in
India is like the cherry on the cake for Indian FMCG industry.
But this sector did not evolve overnight. It took many years to reach it to this
position. As we know, India is always been one of the mostpopulated countries thus
giving huge customerbaseto FMCG companies. So India is the bestplacefor FMCG
companies to grow. Now let’s take a look to the history of FMCG sector.
The period from 1950's to 1980's did not see a lot of a development in this segment
attributable to the low purchasing power of Indians and the government pushing for
small scale sector. HUL and Amul were one of the main organizations that stuck
around and advanced as market players. Amul metamorphosised the dairy part in
India. Built up in 1946, Amul brought white revolution in India and changed the
unorganized dairy sector to an organized one. They pioneered items like milk
powder and baby food from buffalo milk. The brand keeps on becoming stronger
continuously and sells around 3960 tons of milk items every year. And how can we
forget everyone’s all-time favorite “Amul Girl”
Another major company at that time was HUL which was then more focused on
urban sector. But then there was one more companyemerged ‘NIRMA’ that focused
on giving cheap products to theconsumer. Fore.g., surf Excel at that time was costly
product for most of the people and not everyone was ready to spend that much
amount on washing powder. So NIRMA found this as an opportunity and started
making cheap washing powder which then became success.
Then there was the phase ofLiberalization, which led to increase in choices ofIndian
consumers as well as their demand. Liberalization also encouraged various MNCs
to invest in one of the most populated country on Earth. With this living standard of

Indian consumers was also rising and to cater this MNCs started producing high end
and good quality products.
Their strategy became two-pronged over the last decade —
One, invest in expanding the distribution reach far and wide across India to enable
market expansion. And two, upgrade existing consumers to value added premium
products and increase usage of existing product ranges.
So following these strategies, most of the companies fought with each other to mark
their presence in rural segment of India. Those who succeeded capturing the share
of rural market reaped more profits than other companies.
One of the biggest evolution in the FMCG Indian sector was the introduction of
‘Sachet’. Due to its introduction in the market, now even poorpeople or lower class
people have access to costly shampoos, detergents and hair oil. These sachets were
also purchased by middle class people and because of this now these things were
easily portable now. This innovation helped FMCG companies gain more customers
form Tier11 and Tier111 cities. These trends have tremendously evolved this sector.
Second major change was the way these companies did advertising of their products.
They shifted from traditional marketing to digital and new ways of marketing. They
have tied up with somee-commerce giants to promote their products and to entertain
the needs of younger generation they have also delivering packaged foods with less
delivering time.

Major Players in Sector
Top Ten Players in FMCG Sector(basedon their revenue)
1. Hindustan Unilever Limited (HUL)
2. Colgate-Palmolive
3. ITC Limited
4. Nestlé
5. Parle Agro
6. Britannia Industries Limited
7. Marico Limited
8. Procter and Gamble
9. The GodrejGroup
10.Amul
Other major players in the industry
11.Dabur
12.GlaxoSmithkline Consumer Healthcare ltd.
13.Emami Ltd.
14.Reckitt Benckiser
15.Johnson & Johnson
16.Nirma ltd.
17.Cadbury India

THEORETICAL FRAMEWORK
Fundamental Analysis: What Is It?
The fundamental analysis focuses oncalculating a security’s fair value and compares
it to the market price to determine if the security is overvalued, undervalued, orfairly
valued. By taking into account the economic variables that influence the investment
decision-making, this analysis can estimate future trends based on a firm’s or the
market’s real potential. On a broader scope, we can perform fundamental analysis
on industries or the economyas a whole. The term simply refers to the analysis of
the economic well-being ofa financial entity as opposedto onlyits price movements.
The term fundamental analysis is used most often in the context of stocks, but we
can perform fundamental analysis on any security, from a bond to a derivative. As
long as we look at the economic fundamentals, we are doing fundamental analysis.
For the purpose of this project, fundamental analysis always is referred to in the
context of stocks.
Financial Ratios:
Financial ratios are generally computed fromthe financial statement ofthe company.
They tell us about the specific things about the company, for e.g., dividend payout
ratio tells us what percentage of the earnings, company pays as dividend. Some of
the most well-known valuation ratios are price-to-earnings and price-to-book.
Each valuation ratio uses different measures in its calculations. For example, price-
to-book compares the price per share to the company's book value.

The calculations produced by the valuation ratios are used to gain some
understanding ofthe company's value. The ratios are compared onan absolute basis,
in which there are threshold values. For example, in price-to-book, companies
trading below '1' are considered undervalued. Valuation ratios are also compared to
the historical values of the ratio for the company, along with comparisons to
competitors and the overall market itself.

LITERATURE REVIEW
According to Dr. Pramod H. Patil, Assistant Professor, School of Management
Sciences, Sub-centre Latur, Volume:5, Issue:2, February 2016, FMCG sector is
recession proof and have created huge employment opportunities in India, hence
becoming one ofthe key pillars ofIndian economy. He says that competition coming
from the unorganized sector can be overcome by increasing brand awareness and
reducing costthrough sharing resources such as distribution network and the future
of FMCG sectoris bright as favorable movements in demand and supply side of this
sector.
According to Dr. N. Manicka Mahesh, Assistant Professor, schoolofManagement,
Sri Krishna College of Engineering and Technology, Coimbatore,
Volume:6,Issue:5, may 2016, if the foundation of the company is strong then the
performance of the company will be everlasting nature. Pricing of the scrips do not
depend on the euphoria built among the market participants, but the valuation
matters. It is better to trade and invest with the scrips which are fundamentally
strong in nature.
According to Dr. G. Sudarsana Reddy, Associate Professor, Department of Studies
Research in Commerce, Volume 4, Issue 1, January 2013, while taking the
investment decision, the investor should take relevant information. The analysis
like fundamental and technical are very important to make better decision of buying
and selling shares. Investing in share market is risky and long term investment are
always more preferable than short term investment so the investor should prefer
long term investment like equity stocks

OBJECTIVE OF THE STUDY
In this project, I have done the fundamental analysis of FMCG industry. The main
objective ofthis project is to find somegood FMCG stocks to invest in orto make a good
portfolio out ofthese stocks. Weare focusing onearning maximum profits byminimizing
the total risk after analyzing trends of the industry and by doing fundamental analysis.
Other objectives are listed below:
 To know about the FMCG industry and its contribution towards Indian economy.
 To guide investor that in which company’s stock to invest in.
 To find out some ratios and analyze them for the purpose of investment.
 To calculate the risk of the stocks.

RESEARCH METHODOLOGY
Problem Statement:
Fundamental analysis with reference to FMCG (Fast moving Consumer Goods) sector.
Assumption: -
Certain assumptions of this study are given below:
1. All the data taken is secondary and taken from internet.
2. I have taken 5 major companies ofFMCG industry and have done the analysis on
the basis of those companies only.
3. In some situations, my personal judgement is involved.
Benefits:
Fundamental analysis helps in:
1. Identifying the intrinsic value of a security.
2. Identifying long-term investment opportunities, since it involves real-time data
Research Design:
Research design is a framework of techniques and methods chosenby researcher to
carry out his research in a logical manner so that he can handle the predefined
research problem. In this research, I have used descriptive research design as in this
research I gathered, analyzed and presented the collected data to show whether the
company is fundamentally strong or not.

Sample Design:
I have selected few major FMCG companies to do the fundamental analysis and I
have selected them on the basis of their market capitalization.
Sample Size:
I have chosen top 5 FMCG companies on the basis of their market capitalization.
Data collection:
The data collected for the analysis is through the secondary sources like company’s
annual report, various websites etc.
Limitation of Study
The data collected is through the secondary sources hence the reliability of the data
is not 100% and I have taken only past 5year financial information.

DATA ANALYSIS AND INTERPRETATION
The study will provide a precise presentation ofdata and guidelines that will help an
investor to finalize his investment decision I have chosen top 5 companies as my
sample. These5 companies are the biggest in the FMCG sectorbased ontheir market
capitalization. These 5 companies are Hindustan Unilever, ITC, Dabur, Britannia
and Godrej consumer products ltd. I am going to analyze their financial statements
using ratios and will comment onthem whether the companyis fundamentally strong
or not.
377298.31
336408.34
76303.78 73510.96 67340.30
0.00
50000.00
100000.00
150000.00
200000.00
250000.00
300000.00
350000.00
400000.00
1
Rs.
(in
crores)
Market Capitalization
HUL ITC dabur britannia godrej consumer products ltd.

P/E RATIO
Price to earnings ratio known as P/E ratio is used for valuing a company that
measures its current share price relative to its Earning per Share (EPS). This ratio is
generally computed to compare different companies of same industry or same
company with its past records. A company with a high P/E ratio usually indicated
positive future performance and investors are willing to pay more for this company’s
shares.
Formula to calculate P/E Ratio:
P/E Ratio = Market Value per Share/ Earning per Share
Companies 2018 2017 2016 2015 2014
HUL 64.61 51.03 43.05 40.32 33.24
ITC 29.11 31.05 28.36 25.84 28.64
DABUR 50 40.73 38.54 43.04 33.08
BRITANNIA 33.48 25.74 20.77 21.83 16.08
Godrej Consumer
Products ltd. 47.03 45.43 55.76 41.61 35.27
0
10
20
30
40
50
60
70
2018 2017 2016 2015 2014
P/E RATIO
HUL ITC DABUR BRITANNIA Godrej Consumer Products ltd.

INTERPRETATION:
HUL: As we can see from the chart the P/E Ratio ofHUL keeps on increasing over
the years and it is the only company among my sample taken that has a positive
growth of P/E ratio. This is a favorable situation for the investors. The P/E ratio of
HUL is nearly doubled over 5 years.
ITC: The P/E ratio for ITC is rather fluctuating over the years. Like in the 2015 it
declined by 3 points then for two consecutive years it rose than after this in 2018 it
again declined and it is not good for a company who is trying to retain its
shareholders.
DABUR: The P/E ratio for Dabur is not so fluctuating as it has declined only for 1
year, i.e. for 2016 and it has keeps on increasing for the rest of years. And also its
P/E ratio for 2018 is very high so investors may want to invest in this company.
BRITANNIA: the ratio of this company has shown a positive trend over years
except 2016 where it has fallen by 1 point. This ratio for the company has doubled
itself in the past 5 years so maybe we can say that company has some potential and
going on a right track.
Godrej Consumer Products: The P/E ratio of this company is good as compared
to rest of the companies but it had not shown a good trend over the years. Like from
35% in 2014 it went up to 55% in 2016 and then in 2018 it declined to 47%. So by
looking at the trend we cannot say what it is like to be in the future as it is uncertain
but this company does have a good P/E ratio so risky investors may invest in it.
In general a higher ratio means that investors anticipate higher performance and
growth in the future. So P/E ratio of HUL is highest followed by Dabur and Godrej
so according to this ratio HUL is the company in which you should invest your
money into.

DIVIDEND PAYOUT RATIO
Dividend payout ratio or DPR is the total amount of dividends the companyis paying
out to the shareholders relative to its net income. It is the percentage of total earnings
paid to the shareholders in the form of dividend. This ratio indicates that how much
the company is paying to the shareholders and how much it is retaining with itself.
Formula to calculate Dividend payout ratio
Dividend payout Ratio = Dividend per Share / Earning per Share
Dividend payout ratio
Companies 2018 2017 2016 2015 2014
HUL 74.39 79.53 81.07 75.2 72.69
ITC 51.41 67.05 69.48 52.14 54.31
DABUR 44.49 39.7 42.12 46.06 45.4
BRITANNIA 27.86 28.44 32.03 30.82 38.91
Godrej Consumer Products ltd. 61.31 23.09 26.47 28.61 31.632
0
10
20
30
40
50
60
70
80
90
HUL ITC DABUR BRITANNIA Godrej Consumer
Products ltd.
Dividend PayoutRatio %
2018 2017 2016 2015 2014

INTERPRETATION:
HUL: HUL pays a good percentage of dividend to its shareholders i.e. 74.39% in
2018 and it is more or less constant over the years which is a very good sign for
shareholders because to pay dividend you have to earn profits and cash. Paying
dividends mean the company is earning good money.
ITC: ITC is not much constant rather it is fluctuating when it comes to paying
dividend. This doesn’t surely means that company is not making profits or earning
money but it can also be the case that the company is earning money but saving it
for the future projects and because of it not giving out dividends. This will make
some shareholders upset.
DABUR: Dividend payout ratio of Dabur in 2014 was 45.4% and in 2018 it is
44.49% and there has been little ups and downs in between. The companyhas almost
a constantdividend payout ratio which is good for shareholders who are looking for
a steady income.
BRITANNIA: This Company is paying lowest level of dividend compared to other
companies in the sectorin my sample. Aged people won’t be happy investing in this
company because generally they are looking for steady income rather than making
an investment seeking capital gains.
Godrej ConsumerProducts: This Company has done very well in terms of
paying out dividend in 2018. It went straight up to 61% in 2018 from 23% in 2017.
Maybe company has earn some big profits and thus distributing to its shareholders.
Constant high dividend payout ratio will attract more shareholders.
Not all the companies who are huge money or make good profits payout higher
dividend because of the opportunity costinvolved with it. They might save this
money for some future projects and pay higher dividends in future. Among above
chosen companies HUL has the highest Dividend payout ratio followed by Godrej
Consumer group.

RETURN ON EQUITY:
Return on equity ratio is a profitability ratio that tells us about the firm’s ability to
generate profits from its shareholders’ investment. In layman terms, it tells us how
much profit each rupee of common shareholders’ equity generates. It is also
considered as a measure of how effectively management is using company’s assets
or investments to generate profits.
A company which have a high ROE ratio is more successful to generate cash
internally. Generally, companies with high ROE attracts investors and it is a better
benchmark when comparing different companies of same industry.
Formula to calculate ROE:
ROE = Net Income / Shareholders’ Equity
ROE
Companies 2018 2017 2016 2015 2014
HUL 74.02 69.18 65.88 115.87 118.04
ITC 21.83 22.49 29.94 31.31 33.51
DABUR 25.36 27.29 32.71 32.64 35.33
BRITANNIA 29.29 32.67 44.05 50.37 43.33
0
20
40
60
80
100
120
140
HUL ITC DABUR BRITANNIA Godrej
Consumer
Products ltd.
ROE%
2018 2017 2016 2015

INTERPRETATION:
HUL: The ROEratio of HUL is greater than its competitors. Actually it is nearly 3-
4 times more than its competitors. But if we look at the past trend of the company,
it is not positive over the time. As it was 118% in 2014, it declined to 65% in 2016
and then from there it is rising slowly coming back on the right track.
ITC: The ROEratio ofthe ITC continuously declined over the years. It was 33.51%
in 2014 and it went down to 21.83% in 2018. This means that company is not
effectively using employing it’s investment to generate more profits which is a red
sign for the shareholders
DABUR: Just like ITC, ROE of Dabur has declined continuously over the years
except for 2016 where it has risen up by point percentage. This type of stock seems
unattractive to the investors and usually they refrain themselves from investing in
this type of stock.
BRITANNIA:ROE of Britannia has risen up by a good percentage in 2015, it went
up to 50% from 43% in 2014. But after 2015, ROE ratio of Britannia has fallen
drastically from 50% in 2015 to 29% in 2018 which is not a good sign for investors.
GodrejConsumerProducts:ROEratio forGodrejwas constant for 3 years straight
from 2015 to 2017 but in 2018 it has risen up by some points which is a good sign
and shows that management has started using its assets effectively.
A company with higher ROE ratio is more favorable to investors than a company
with low ROE ratio. HUL has the highest ROE ratio in the FMCG sector which
investors find very lucrative and hence will want to invest in this company. No
company is near HUL in terms of ROE ratio but it is followed by Britannia with a
ROE ratio of 29.29%.

EV/EBITDA:
The EV/EBITDA as given by its name is computed by dividing EV (enterprise
value) by earnings before interest, taxes, depreciation and amortization. It is a
valuation technique used to compare the relative value of different businesses.
The enterprise value is a true picture of a company in terms of valuation. EV is
calculates by adding market capitalization and Debt and then subtracting cash and
cash equivalents from it. It is a very effective measure when valuing a company.
Formula to calculate this = EV/EBITDA
0
10
20
30
40
50
60
HUL ITC DABUR BRITANNIA Godrej Consumer
Products ltd.
EV/EBITDA
2018 2017 2016 2015 2014
EV/EBITDA (X)
COMPANY 2018 2017 2016 2015 2014
HUL 36.35 29.64 29.31 31.98 25.18
ITC 17.53 20.4 16.05 16.87 20.46
DABUR 38.23 35.41 33.86 43.32 33.21
BRITANNIA 38.05 30.05 26.08 29.92 15.92

INTERPRETATION:
HUL: Value of EV/EBITDA is considered better than P/E ratio because it is a more
comprehensive measure of valuing a company. EV/EBITDA of HUL is lesser when
compared to competitors but it is near other companies and have a positive trend
except in year 2015.
ITC: Value of EV/EBITDA of ITC is worst among all the companies. It stands at
17.53 which is lot lesser than its competitors so investors might want to invest in
other companies.
DABUR: EV/EBITDA of Dabur is quite good as it comes 2nd in the industry just
after Godrej and it is increasing over the years as well except 2016 where it fell by
almost 10% but it is coming back on the right track.
BRITANNIA: This ratio for the company seems to be good as it is more than
doubled itself in past 5 years and in 2018 only it increased by 8%. Britannia is
catching up to its competitors quickly and may even outrun them in coming few
years.
Godrej Consumer Products: EV/EBITDA for Godrej is great if compared to its
competitors. It has highest ratio in the industry and has a good positive growth over
the years. Godrej in the case of this ratio is far ahead of its competitors and is going
to stay ahead because of the positive growth it is having.
Godrej Consumer Products is the clear winner when it comes to analyzing over
EV/EBITDA as other players in the industry have a big negative gap. Dabur is right
behind Godrejwith having a EV/EBITDA of38.23 followed byBritannia with 38.05

NET PROFIT MARGIN RATIO
The net profit margin ratio is calculated bydividing net income bynet sales. It shows
us that how much profit is generated as a percentage of revenue. It is also said as the
best indicator of company’s financial health. Investors can look into this ratio and
see whether the company’s management is generating enough profit from its sales
that its costs and expenses are being covered.
Formula to calculate Net Profit Margin ratio:
Net Profit Margin ratio = Net Income / Net Sales
Net profit Margin %
COMPANY 2018 2017 2016 2015 2014
HUL 15.16 14.07 13.31 14 13.8
ITC 27.62 25.44 26.72 26.31 26.43
DABUR 19.17 18.86 16.33 14.04 13.8
BRITANNIA 10.18 10.02 9.42 8.67 5.86
Godrej Consumer Products ltd. 19 17.85 15.3 14.77 13.84
0
5
10
15
20
25
30
2018 2017 2016 2015 2014
Net ProfitMargin %
HUL ITC DABUR BRITANNIA

INTERPRETATION:
HUL: The NP ratio of HUL is not that great when compared to its other competitors
but it shows a positive trend over the years. It started from 13.18 in year 2014 and
now stands at 15.16% in year 2018. This is not a big gap but the company is
improving its net profit over the years.
ITC: The NP ratio of ITC is greatest when compared to its competitors but it is
fluctuating over the years like it is rising and falling in every alternate years and
investors generally refrain themselves from investing in these type ofcompanies but
ITC has a great NP ratio in 2018 so investors will go for this company.
DABUR: Despite of not having greatest NP ratio if compared to its competitors,
ITC has a very positive growth over the years. Like it started with 13.8% in year
2014 as same as HUL but in 2018 it is 4% stronger than HUL. This means Dabur
has done great work for improving its net profit.
BRITANNIA: Britannia has the lowest NP ratio among its competitors but it has
shown positive growth over the years and its NP is doubled in past 5 year. Despite
of having a smaller NP number it has shown a good growth which is appreciated by
most of the investors.
GodrejConsumerProducts:The NP numbers of Godrejconsumergroup are quite
good and it keeps on increasing year after year. It started from 13.84% in 2014 and
now it stands at 19% in 2018 which is a good sign for investors
So as can be interpreted form the abovedata, the Net profit ratio of the FMCG sector
is quite good and all the companies in this sectorhas shown positive growth over the
years except ITC but it has the greatest Net Profit ratio in the industry followed by
Dabur and Godrej consumer group.

CONCLUSION
Fundamental analysis can be important to investor when they are looking to invest
in company. If they find the financials of the company strong enough then they will
invest in that company.
As per the analysis FMCG sectoris booming with all the factors favoring it. It has a
revenue of $68.4billion in 2018 and projected revenue for 2020 is $103 billion. The
Retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840
billion in 2017, with modern trade expected to grow at 20 per cent - 25 per cent per
annum. Government initiatives are helping the FMCG sectorin every way possible
like government has allowed 100 per cent Foreign Direct Investment (FDI) in food
processingand single-brand retail and 51 per cent in multi-brand retail which would
bolster employment and supply chain and also implementation of GST proved to be
a boon for FMCG industry
I have done the analysis of 5 top companies of FMCG sector and came up with the
result that HUL is the best stock according to some ratios that are: P/E ratio, Return
on Equity ratio and dividend payout ratio but when I calculated EV/EBITDA of the
companies given, Godrej Consumer Group was the clear winner and according to
net profit margin ratio, an investor should invest into ITC. Well clearly 3 major ratios
are telling us that HUL is best but rest two ratios i.e. EV/EBITDA and Net profit
margin ratio tells us some different story and hence cannot be ignored as these are
two important ratios. So accordingto me HUL is a good stockto pickas it pays good
returns on equity and highest dividend payout ratio in the industry and also this
companycomes under the good brand name i.e. Unilever. If one is looking for couple
of stocks then HUL and GODREJ will be the best because ITC has lowest
EV/EBITDA and very bad return on equity.

REFERENCES
https://medium.com/@njmnmims/fmcg-the-indian-journey-37aefb1d889e
https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-new-model-for-
consumer-goods
https://www.ibef.org/industry/fmcg.aspx
https://www.reviewsxp.com/blog/fmcg-companies-in-india/
http://businesstoday.intoday.in/story/fmcg-sector-new-launches-products/1/15747.html
https://www.moneycontrol.com/
https://in.finance.yahoo.com/

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