Best FMCG stocks to buy in India in 2013

Best FMCG stocks to buy in India in 2013

FMCG has been the ever green sector comparing to all other sectors. Investments in FMCG (Fast moving consumer goods) sector have been providing excellent returns to investors. There are several best stocks to buy in FMCG sector now in 2013.

Why FMCG stocks?

FMCG products are sold quicky and at relatively low costs. They include non durable goods such as soft drinks, toiletries, grocery items etc. If you observe the amount of margins would be very small on such items, however when large quantities are sold in short period of time, sales would get multiplied and absolute margins would be very high.

Any additional proofs that FMCG sector has been performing well?

If you observe the top recommendations we have given for best FMCG sector mutual funds, these are the only investment options which provided excellent returns of 30%+ per annum in the last 3 years.

Best FMCG stocks to buy in India in 2013

1) ITC: ITC is one of the consistent performers in the FMCG sector. ITC has excellent distribution network. Its increased operational efficiency is making the stock attractive. Current market price is Rs 274.

Why you should buy ITC:

This is one of the best stocks to buy in India in FMCG sector as it performs well even in the bear market.
Revenues have grown by 18% (QoQ) in Q2-FY13 and 17% (YoY) in FY12.
Revenues are growing at an annualized growth rate of 18% in the last 5 years
Profits have grown by 23% (QoQ) in Q2-FY13 and 21% (YoY) in FY12.
EPS is stable at Rs 8 in the last 5 years.
Estimated EPS for FY2013 is Rs 9.34 and Rs 11.10 for FY2014 which indicates the growth in the profit.
Top mutual funds holding highest share holdings in their portfolio

SBI Magnum FMCG Fund 39%
ICICI Pru FMCG Fund (G) 37%
ICICI Pru Top 200 Fund (G) 8%
SBI Magnum Equity Fund (G) 7%
ING Balanced Portfolio (G) 6%
ICICI Pru Focused Bluechip 6%
Tata Pure Equity Fund (G) 6%
ICICI Pru Target Returns 5%
Tata Equity Management (G) 5%
Kotak 50 (G) 5%

2) Hindustan Unilever Limited (HUL): HUL has been a long term player in FMCG sector. As indicated these FMCG stocks would perform well when markets are going down. Currently it is trading at Rs 498.

Why you should buy HUL:

This is one of the good FMCG stocks to buy in India for long term investment objective.
Revenues have grown by 12% (QoQ) in Q2-FY13 and 12% (YoY) in FY12.
Profits have grown by 17% (QoQ) in Q3-FY13 and 16.7% (YoY) in FY12.
There is growth in EPS of Rs 11.50 for FY2009 to Rs 12.50 for FY2012.
Estimated EPS is Rs 14.86 for FY 2013 and Rs 17.07 for FY2014.
Top mutual funds holding highest share in their portfolio

ICICI Pru FMCG Fund (G) 13%
SBI Magnum FMCG Fund 5%
Tata Tax Saving Fund 4%
Tata Pure Equity Fund (G) 4%
Tata Ethical Fund (G) 4%
Tata Equity Opp. Fund (G) 3%
Tata Dividend Yield Fund 3%
SBI Magnum Tax Gain (G) 3%
SBI Magnum Multiplier Plus 2%
ING Balanced Portfolio (G) 2%

3) Colgate: Colgate has been in the industry for long time. It is continuing to take new initiatives and introducing new products time to time. It has high rural focus which is enabling to expand the market quickly. It continues to create awareness programs for the consumers. Currently it is trading at Rs 1,502. Among the FMCG sector, this could be topped as one of the best stocks to buy in India.

Why you should buy Colgate:

Revenues have grown by 17% (QoQ) in Q2-FY13 and 17% (YoY) in FY12.
Profits have grown by 45% (QoQ) in Q2-FY13 and 11% (YoY) in FY12.
EPS is growing year on year Rs 17 for FY2008 vs Rs 32.83 in FY2012.
Estimated EPS for FY13 is Rs 39.37 and FY14 is Rs 45.65 which indicates that profits would grow in future.
Top mutual funds holding highest share in their portfolio

Tata Dividend Yield Fund 2%
Tata Tax Saving Fund 1%
Tata CPOF – Series I (3yrs) 1%
DSP-BR Top 100 Equity – IP 1%
DSP-BR Top 100 Equity – 1%
Tata Pure Equity Fund (G) 1%
DSP-BRTax Saver Fund (G) 1%
DSP-BR Opportunities 1%
Tata Young Citizens Fund 1%

4) Dabur India: Dabur India has been trying to grab its market share in India. For some time, it has been focusing to extend its rural business. Overseas acquisitions of Hobi Kozmetic and Namaste group integration is complete now and they would enable global focus for its products. Current market price is Rs 126.

Why you should buy Dabur India:

Revenues have grown by 18% (QoQ) in Q2-FY13 and 14.6% (YoY) in FY12.
Profits have grown by 12% (QoQ) in Q2-FY13 and negative 1.7% (YoY) in FY12.
EPS is Rs 2.66 in FY2012.
Estimated EPS for FY13 is Rs 4.40 and FY14 is Rs 5.20 which indicates that profits would grow in future.
Top mutual funds holding highest share in their portfolio

SBI Magnum FMCG Fund 3%
ICICI Pru Nifty Junior 2%
Tata Ethical Fund (G) 2%
ING Core Equity Fund (G) 2%
ICICI Pru FMCG Fund (G) 1%
Kotak Classic Equity (G) 1%
SBI Blue Chip Fund (G) 1%
Kotak Equity Arbitrage 1%
ICICI Pru CPO Fund 1%
Kotak Balance 1%

5) Nestle: Nestle has been performing well in the last few years. Current market price is Rs 4,815.

Why you should buy Nestle:

Revenues have grown by 8% (QoQ) in Q2-FY13 and 20% (YoY) in FY12.
Profits have grown by 17% (QoQ) in Q2-FY13 and 2.3% (YoY) in FY12.
EPS is growing year on year Rs 42.92 for year ending Dec-07 vs Rs 99.73 for year ending Dec-2011.
Top mutual funds holding highest share in their portfolio

ICICI Pru FMCG Fund (G) 4%
Tata Equity Opp. Fund (G) 4%
ICICI Pru Target Returns 4%
ICICI Pru Indo Asia Eqty RP 3%
Tata Young Citizens Fund 3%
ICICI Pru E & D-Volatility 2%
Tata Ethical Fund (G) 2%
ICICI Pru Focused BluechipEqty 2%
SBI Magnum Multiplier Plus 2%
SBI Magnum FMCG Fund 1%

Conclusion: The above best FMCG stocks to buy in India are for long term investment objective. As indicated earlier, since the market is in the peak level now, during market correction, any fall in these stock prices, investors can grab the opportunity of buying them for long term investment objective. I felt these are some of the best investment plans for 2013 where you can create wealth.

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Best FMCG stocks to buy in India in 2013

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Suresh KP

Founder at Myinvestmentideas.com

Suresh KP is the Founder of Myinvestmentideas. He is NISM Certified - Investment Adviser and NISM Certified - Research Analyst. He has been analyzing financial markets in the last 20 years.He can be reached at suresh@myinvestmentideas.com