FMCG Stocks in India 2024

1. Fast-Moving Consumer Goods (FMCG) stocks have been a popular investment choice in India due to their consistent demand.
2. FMCG accounts for 15% of the country’s GDP, serves over 1.3 billion people, and employs over 10 million people in India.
3. Household and personal care items account for 50% of FMCG sales in India.
4. Notable small-cap FMCG stocks in India include Naga Ltd., Tata Consumer Products Ltd., and KDDL Ltd.

In 2024, FMCG stocks in India are witnessing significant growth, driven by a burgeoning middle class, evolving consumer preferences, and rising disposable incomes. Companies are increasingly focusing on innovations, sustainability and expansion of their product lines to meet diverse consumer needs. With robust economic recovery and a shift toward health-conscious products, FMCG stocks are expected to offer promising investment opportunities. Among these, FMCG small-cap stocks are likely to offer attractive investment opportunities due to their potential for high growth.

The FMCG sector in India involves a wide range of product categories, such as food & beverages, personal care, home care, healthcare, beauty, and cosmetics. Factors such as favourable government policies, changes in consumer behaviour, rapid urbanisation, the growth of e-commerce platforms, the introduction of new branded products, and increasing disposable incomes have led to exponential growth of the Indian FMCG industry. The market is expected to reach nearly US $615.87 billion by 2027, growing at a robust CAGR of 27.9% from 2021 to 2027.

Also read: Growth stocks

As per analyst ratings, these are some of the popular FMCG stocks in 2024:

ITC

With a market capitalisation of Rs. 5,87,618 crores, ITC stands as a large-cap stock in the consumer staples sector. The company has shown a robust financial performance with a revenue of Rs. 73,636.45 crores and a profit of Rs. 20,458.78 crores for the fiscal year 2024. ITC is considered a low-risk investment, being 1.47 times as volatile as the Nifty index.

Varun Beverages

Varun Beverages Limited is classified as a mid-cap stock. The company has demonstrated strong financial performance, delivering a significant volume growth of 14% in 2023. The stock's volatility is 1.72 times that of the Nifty index, indicating a moderate risk profile.

Godrej Consumer Products

Godrej Consumer Products Ltd. is classified as a large-cap stock with a market capitalisation of Rs. 1,10,553 crores, placing it 87th in its category. The stock is considered low risk, being 1.48 times as volatile as the Nifty index.

Hindustan Unilever

Hindustan Unilever Ltd. is categorised as a large-cap stock with a market capitalisation of Rs. 6,43,412 crores, ranking 9th in this category. The stock is considered low risk, being 1.41 times as volatile as the Nifty index.

Britannia Industries

Britannia Industries Ltd. is an India-based multinational food products firm that sells breads, biscuits and dairy products. As of 2023, around 80% of the company’s annual revenue is derived from biscuits. The company accounts for a market share of 33% in the overall organised biscuits market in India. Britannia Industries Ltd. is a large-cap stock in the consumer staples sector.

When selecting FMCG stocks, these are some of the important factors that you may want to consider to make informed investment decision:

1. Company financials
   Assessing the financial health of an FMCG company is crucial. You can look into the company’s revenue, debt levels, profit margins, and cash flow statements.
2. Product diversification
   A company with a diverse product portfolio may be less vulnerable to market volatility. You can look for FMCG companies that offer a wide range of products across different categories.
3. Innovation and R&D
   Innovation plays a crucial role in the FMCG industry. Companies that invest in R&D to develop new products or improve existing ones can gain a competitive edge.
4. Regulatory compliance
   FMCG companies must adhere to strict regulatory standards related to product quality, safety, and environmental impact. Ensuring that a company complies with these regulations is important to avoid legal issues and maintain consumer trust.
5. Dividend payouts
   Many FMCG companies offer regular dividends to their shareholders. If you are looking for income in addition to potential capital appreciation, you might want to consider the dividend history and payout ratio of the company.

Also read: Dividend stocks

FMCG stocks in India can offer a promising investment opportunity. The Indian market is essentially dominated by the top FMCG companies. Thus, with the growth of the Indian economy, the sector is expected to continue its upward trajectory. Investing in small-cap FMCG stocks can offer substantial growth potential due to their ability to capitalise on emerging consumer trends and market opportunities. However, FMCG stocks can be affected by economic conditions, changing consumer trends, and competition. Analysing the performance of small-cap FMCG stocks involves looking at factors such as market share, revenue growth, and the ability to adapt to changing consumer preferences.

To make informed investment decisions, you must research the market thoroughly, stay updated on market developments, and closely monitor the financial performance of FMCG companies.

Also read: What is a Demat account

The FMCG sector is growing rapidly and is likely to maintain its growth trajectory in the coming years. It is a competitive industry that can provide attractive investment opportunities in the long run. FMCG stocks have long been a popular investment choice due to their essential nature and resilience in various economic conditions. Many investors are particularly turning to small-cap FMCG stocks as a way to diversify their portfolios and gain exposure to dynamic, high-growth companies in the consumer sector.