FMCG Top Leaders: You should know about the leaders of FMCG sector

You know when the Covid situation came . the whole market went down cause of which almost all sectors went down out of all these sectors, there was one sector . which acted as a defensive sector means if you had stocks from that sector . your stocks would not have gone down at the rate of the overall market .

This sector’s name is FMCG sector . Do you know in FMCG sector which are the top five companies .these top companies that we have chosen . the criteria, we have kept for this is Operating Profit Margin.  cause Operating Profit Margin,  there can be a red flag . that which company isn’t doing well. we will talk about the top 5 FMCG companies . whose Operating Profit Margin is really good as overall compared to the whole industry .

The first company whose operating profit margin is very good in the FMCG sector .  If I talk about the first company . The first company is Colgate . You might have surely heard of Colgate . You might be using its products a lot . If I tell you a bit about Colgate then . then its market capitalization is more than 37000 Cr . If I talk about its PE ratio . then its PE ratio is of 46 If I talk about the overall FMCG sector’s PE ratio . then the average comes out as around 42 compared to the industry, Colgate’s PE ratio is higher .  after PE Ratio,  now I will talk about this criteria on the basis of which we chose Colgate under top FMCGs .

Which companies have the best operating profit margin . Now you would want to know Colgate’s operating profit margin  .  if I talk about Colgate’s operating profit margin then . their operating margin comes out as 26.6% . which is a good number for an FMCG sector . if you don’t know what operating profit margin is so I will tell you a bit about it so operating profit margin tells you that if a company made a sale of Rs 100 . and its expense was Rs. 80 then margin comes out as Rs. 20 . so in this case, your operating profit margin comes out as 20% . so the higher a company’s operating profit is that means that the company is using its resources efficiently and the company’s efficiency in overall production is high .

Now  let’s talk about Colgate’s shareholding pattern . How is their shareholding pattern? So first I will talk about Total Promotor Holding . that how much percent holding does their promotor’s own . So if I talk about Colgate then the promotor’s of this company has 50.99% holding . which has remained constant if I compare it to June 2019 and if I talk about mutual fund holdings there that how has mutual fund invested in this company . so mutual fund out of its total shareholding pattern used to be 6.09% in December, 2018 which has reduced to 3.66% . so the mutual funds holding’s share in this company has reduced a bit in a few years .

Now  let’s talk about the second company . The name of the company is Emami Ltd . If I talk about its market capitalization, it is more than 10000cr . but it is important for you to know what its operating profit margin .  FMCG market, operating profit margin is an important criterion . so if I talk about Emami Ltd . its operating profit margin comes out at about 26% So  if I talk about this company’s PE Ratio . then this company’s PE ratio comes out at around 34% and if we compare its PE ratio with the industry’s . then the FMCG sector industry’s PE ratio comes out as about 42% . The company’s PE ratio is lesser in comparison which comes out as a good point and if I talk about Emami’s brands .

The brands that you use in your daily life are Boroplus, Navratna oil, Jhandu Balm and many other products that you use in your daily life .  now let’s talk about its promoter holding . How much is it’s promoter holding? If I talk about Emami Ltd, its promotor’s holding is more than 52% but there is an important thing here that you need to focus on so out of its total promotor’s holding of 52% out of which 90% of its holding has been pledged somewhere and if we talk about its mutual fund holding then . then out of its total holding, 24% is its mutual fund’s holding . which has increased in the past few quarters .

Now let’s talk about the third company . and of the third company, mostly I wouldn’t even have to introduce . The hint is that it is India’s biggest FMCG sector’s company . Yea, you might have guessed it correct . Hindustan Unilever Limited . If I talk about Hindustan Unilever Limited . then this company’s  market capitalization is more than 5,10,000 Cr .

Which makes it one of the top five India’s FMCG companies . If I talk about this company’s operating profit margin . then the profit margin comes out as 24.8%  .which is considered to be a good percentage in this industry . and if I talk about HUL’s PE ratio then . HUL’s PE ratio comes out at around 69 which in comparison to the FMCG sector’s Avg PE ratio is around 42 in comparison to that, this company’s PE ratio is higher .  if I talk about HUL’s shareholding pattern then the promotor holding comes at around 61.90% and if we compare it to the earlier quarter . then there, we can see a bit of increment . and whenever there is an increase in the promotor’s holding .

It is considered to be a positive thing in the industry . and if I talk about mutual fund holding . then in the whole shareholding, mutual fund holding is only 2.58% . it’s quite constant if I compare it to the previous few quarters.

Now let’s talk about the fourth company . If I give you a small introduction on the fourth company  .     then you might have definitely used its products in your college . If not in college, then in real life you might have used this product . This product’s name is Maggi . and the company which owns Maggi brand is Nestle India Ltd . If I talk a bit about Nestle India Ltd then this company . then this company’s market capitalization is around 1,60,000 Cr . and if I talk about its share price then then one share of this company trades in Rs 18000 and you know that in the last year the market has given a very negative return If I tell you about Nestle India’s last one year’s returns then . then this company has given a return of almost 42% . which means when the market going down a lot . this company was doing well in comparison .

Now if we talk about operating profit margin . that how much is the operating profit margin of Nestle India. then the operating profit margin at around 23.8% . which is considered to be a good percentage in the industry .  let’s talk about Nestle’s price to earning ratio . if I talk about its PE ratio then this company’s ratio comes around 80 . which is way higher than its industry’s average .

let’s talk about the fifth and last company . The name of the company is Godrej Consumer Ltd. If I tell you about this company in detail . then its market capitalization is more than 73000 crores . if we talk about Godrej Product Ltd’s PE ratio . then its PE ratio is around  47 if I compare it to the industry’s PE ratio . Its industry’s PE ratio comes around 42 in comparison to which the PE ratio is not much higher . in the last one year, this company has given a negative return of 18% but then the interesting thing about this company is .When the new about COVID was on peak at that time this company’s share price touched Rs 235 . after which it rebound and has shown a good recovery even after bad times. If we talk about this company’s operating profit margin .

Then this company’s operating profit margin is more than 21% . which is considered to be a good no. in the FMCG sector . So  the five companies that I spoke to you about  was purely for educational purposes . I wanted to tell you that in every industry . operating profit margin is a very important parameter .

Which shows you how well a company is utilizing its resources and whenever you do research and analysis study the operating profit of the company well . If the company is growing then it is very important for the company’s operating profit to remain constant or we should get to see improvements there . so if you are not getting these improvements and the company’s operating profit margin is very less . then you should consider this as a red flag and avoid that company .

 

 

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