Would you use the Aashirwad aata or Annapurna aata? Then, there are choices between Dabur red toothpaste and Nimyle toothpaste. The same competition exists between Savlon sanitizer or handwash and Lifebuoy sanitizer or handwash. You have used products from either one of the brands or both HUL and ITC.
The two FMCG conglomerates, ITC and HUL, have been neck-and-neck in terms of features and products for many years. In the FMCG industry, the competition is fierce, and the sale of products depends a great deal on the combination of price and quality.
The good news is that the stock prices of these two companies have been favorable even during the recent volatile periods.
This blog will discuss the two FMCG brands that are most popular: HUL (Hindustan Unilever Limited) and ITC. We will first take a look at the FMCG industry as a whole.
The FMCG Sector
According to the FMCG industry in India (industry reports March 2022), it is India’s fourth largest industry. India’s growth (50%) is mainly attributed to the sale of household and personal care products.
Sector growth is driven by the desire of individuals to live a comfortable life in urban and rural areas, with pride in using popular brands.
Around 55 percent of revenue is generated by the FMCG segment. The urban customer base is a major contributor to the FMCG segment’s revenues and profits in India.
FMCG products are also a major part of the spending in rural and semi-rural regions.
The FMCG industry in India will grow by over 14 percent by 2025. This potential growth can be attributed to the increasing internet connectivity in the country. The acceptance of ecommerce platforms as a means to buy and sell goods is another important factor. According to the Advantage India Study by IBEF, the ecommerce segment will contribute the most to FMCG sales in 2030.
FMCG companies are a popular investment choice for most investors because they’re considered to be evergreen. Due to factors like brand loyalty and a moderate shelf-life, FMCG sales are consistent throughout the year.
Please take a look at two FMCG giants in India and their respective share performance.
HUL Company Overview
HUL is one of India’s leading FMCG conglomerates, with more than 50 FMCG brands. The company has operated in India for over 90 years, and its headquarters is in Mumbai.
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HUL has been producing some of its most famous brands for over a hundred years. Lifebuoy has been around since 1895, Brooke Bond has been there since 1900, and Dalda was founded in 1937.
Here are the financials of HUL (NSE HINDUNILVR, BSE 500696).
ITC Company Overview
ITC’s head office is located in Kolkata. It has a diverse private sector presence within the Indian FMCG industry. The company operates 13 businesses in five different segments and exports to over 90 countries.
ITC has recently entered into joint ventures to explore profitable areas. In 2021-22, its business volume exceeded Rs. 24,00 crores.
ITC has become India’s largest private sector company by gross value (sales), surpassing Rs.94.104 crores and breaking Rs.15.000 crores net profit (as of March 2022).
Investors prefer ITC’s stock (NSE: ITC, BSE: 50875) due to the company’s ever-shining brand of cigarettes and its other fast-growing business.
Learn about the financial health of their company:
The following are key ratios for comparison between the two FMCG conglomerates.
Stock Comparison: HUL and ITC
Here are some ratios and parameters to consider when making an investment decision:
ROE – Return on Equity
ROE tells you how much value the equity of a company brings to a shareholder. The higher the ROE, the better the returns for shareholders. HUL’s ROE, as of July 20,22, is 18.33 percent, while ITC’s ROE for the same period was 25.66 percent.
