4 FMCG Stocks to Play the Monsoon recommended by Markets Mojo

By | 24th April 2018

Today’s Economic Times carries a report that says, “A good monsoon prediction lifts spirits on Dalal Street”. It further adds that this augur well for rural-focused companies.

The announcement of a normal monsoon in addition to an increase in farmer income due to a 15% hike in the Minimum Support Price for crops could mean an increased demand and greater rural consumption. One of the sectors which could gain from a good monsoon is FMCG.

A Brief Synopsis of the Four Stocks recommended by Markets Mojo

Godrej Consumer

This Large Cap company, having MCap of Rs 73,372.38cr, is a leader in the Indian FMCG sector, with leading Household and Personal care products. The company’s product range includes brands like Cinthol, Fair Glow, Evita, Vigil, Godrej Expert, Anoop Renew, Godrej Dishwash and more.

The institutional holding of the company is high at 30.07%

Growth: Over the last 5 years, the company has shown a Sales growth of 10.03%. In the last 9 months, the Sales has grown at 3.7%, and PAT has grown at 10.9%

Profitability: The Average ROCE of the company has been 19.8% and the ROE is 22.4%. This can improve if the order book leads to profitable growth.

Stock Performance: The stock is up 37% over 1 year and 93.4% over the last 3 years.

GlaxoSmithKline Consumer

This Large Cap company, having MCap of Rs 27,728.66cr, is in the business of manufacturing health drinks. They have created brands like Horlicks, Boost, Maltova and Viva.

The institutional holding of the company is at 12.79%

Growth: Over the last 5 years, the company has shown a Sales growth of 5.8%. In the last 9 months, the Sales have reduced by -0.5%, and PAT has grown at 1.5%

Profitability: The Average ROCE of the company has been 29.7% and the ROE is 24.5%. This can improve if the order book leads to profitable growth.

Stock Performance: The stock is up 13.4% over the last 1 year.

 

Dabur India

This Large Cap company, having MCap of Rs 60,578.69cr, is the fourth largest FMCG stock in the country currently catering to the healthcare, personal care & food segment. The company’s product range includes Hajmola, Pudin Hara, Glucose D, Odomos, Odonil, Dabur Red Toothpaste and more.

The institutional holding of the company is high at 26.21%

Growth: Over the last 5 years, the company has shown a Sales growth of 4.9%. In the last 9 months, the Sales has reduced by -1.2%, and PAT has grown at 1.5%

Profitability: The Average ROCE of the company has been 27.5% and the ROE is 30.4%.

Stock Performance: The stock is up 22.3% over the last 1 year.

 

Bajaj Corp

This MidCap company, having MCap Rs 6,957.58cr, is engaged in the business of hair oils. The company markets the hair oils under the brand names Brahmi Amla, Amla Shikakai and Jasmine hair oil. Its key product is Bajaj Almond Drops which is the market leader in the light hair oil segment.

The institutional holding of the company is high at 29.75%

Growth: Over the last 5 years, the company has shown a Sales growth of 7.4%. In the last 9 months, the Sales have grown by 1.9%, and PAT has reduced at -4.4%

Profitability: The Average ROCE of the company has been 41.3% and the ROE is 35.5%.

Stock Performance: The stock is up 19.6% over the last 1 year.

 

How did we select these three stocks?

  • India’s Meteorological Department has predicted a normal monsoon this year. A good monsoon helps rural incomes which should help increase rural Demand.
  • If this event plays out, one of the sectors that could benefit is the Fast-Moving Consumer Goods Sector. The companies in the sector could see a positive Financial trend.
  • The FMCG sector has been a strong performer across the time period. Over the last 10 years, the Nifty FMCG Index is up 362% versus the Nifty which is up 112%. In general, the volatility of the FMCG stocks is also lower than average. The additional good news is that there are other, more structural factors, which will help the rural economy already in play.
  • Using our MojoLogic screener we’ve identified 4 stocks in the FMCG sector. We have chosen companies for which:
    • Quality which is Good or Excellent.
    • Valuation which is Attractive or Very Attractive
    • Financial Trend which is Flat, Positive, Very Positive or Outstanding
    • Moving Averages which are Mildly Bullish or Bullish
    • Market Cap is greater than Rs. 1000 cr.

You might like this: Market Gossips For The Week Of 26 March – 30 March, 2018

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Disclaimer:

My descriptions, videos, presentations are only for educational and information purposes and under no circumstances should be used for making investment decisions. I cannot guarantee the accuracy of any information provided.
The stocks picks are based on my own research and personal views and sometimes are from newspapers, tv channel program, magazines, etc. No part of compensation is or will be directly or indirectly related to the views and recommendations of this research. I have not served as an officer director or employee of the company and have not been engaged in the market – making the activity of the company covered in the research report. Consult qualified financial advisor before making any investment decision.

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