Britannia, Dabur, Godrej, Nestle, HUL: Kingpins

Britannia Industries is the Market Leader in the Biscuit Market and holds a share of 33% in the Market. HUL is the largest soap maker in India. Nestle holds 97% Market Share in Nestle Cerlac and Dabur India enjoys 40% Market Share in the Market in its Dabur Honey Product.

The Fast-moving Consumer Goods (FMCG) Industry is mainly responsible for producing, distributing and marketing Fast-moving Consumer Goods. FMCG Sector is the 4th largest sector of the Indian Economy. Most commonly sold FMCG Products include – Toiletries, Cosmetics, Household Products, Electronic Goods and Packaged Food.

Since the Sector encompasses a diverse range of Products, different Companies dominate the Market in various sub-sectors. However, some of the top FMCG companies in India are – Nestle India, Hindustan Unilever Limited, Britannia Industries, Dabur India, Godrej Consumer Products Limited and Marico

These Companies hold good Market Share in different Product Segments.

Key Financial Parameters to See

(i) Net Sales

10 year sales growth of Nestle HUL Britannia Dabur and Godrej
  • Britannia Industries Revenue grew at a CAGR of 12% over last 10 years.
  • On the other hand, over the last 10 years Revenue of Dabur India and Godrej Consumer Products grew at CAGR of 10% and 17% respectively.
  • Revenue of both Nestle India’s and Hindustan Unilever grew at a CAGR of 8% over past 10 Fiscal years, which is relatively low among their Peer Group Companies.

(ii) Profit After Tax

10 year PAT growth of Nestle HUL Britannia Dabur and Godrej
  • Over the past 10 years, Nestle India’s Profit grew at a CAGR of 10%.
  • PAT of HUL and Dabur India has grown at CAGR of 12% and 11% respectively over the past 10 Fiscal years.
  • Britannia Industries has shown a good PAT Growth over the last 10 years. Britannia’s PAT grew at CAGR of 30%.
  • On the other hand, Godrej Consumer Products’ PAT grew at a CAGR of 16% in the last 10 Years.

(iii) ROCE

10 year ROCE growth of Nestle HUL Britannia Dabur and Godrej
10 year ROCE trend of Nestle HUL Britannia Dabur and Godrej

All the Top 5 FMCG Companies have been maintaining healthy ROCE over last 5 Fiscal Years.

Nestle’s ROCE increased from 28.70% in 2015 to 55.06% in the year 2020, showing a good growth. HUL retained its ROCE growth from last 2 years. Britannia Industries’ ROCE decreased to 37.12% in 2020 from 81.56% in 2015.

On the other hand, both Dabur India and Godrej have shown a moderate ROCE growth over last 5 years.

(iv) PBIDTM %

10 year EBITDA growth of Nestle HUL Britannia Dabur and Godrej
10 year EBITDA trends of Nestle HUL Britannia Dabur and Godrej

PBIDT Margin of Nestle India has shown a moderate growth in last 5 years i.e. from 19.96% in 2015 to 25.07% in 2020. HUL’s PBIDT Margin grew to 22.92% in 2020 from 17.64% in 2015, showing a moderate growth.

Britannia Industries PBIDTM% has grown from 11.86% in 2015 to 17.34% in 2020, showing a good growth. On the other hand, Dabur India and Godrej have shown an average PBIDTM% growth from the year 2015 to 2020.

(v) PATM %

10 year PAT growth of Nestle HUL Britannia Dabur and Godrej
10 year PAT trend of Nestle HUL Britannia Dabur and Godrej

Nestle India has shown a good PAT Margin growth over last 5 Fiscal years i.e. from 6.64% in 2015 to 15.60% in 2020. HUL’s PAT Margin grew at moderate level in the last 5 years. Britannia Industries PAT Margin has grown to 11.38% in the year 2020 from 8.58% in 2015, showing a good growth.

Dabur India has been maintaining its PATM% over the last 4-5 years. On the other hand, Godrej has shown a volatile growth in its PAT Margin from the year 2015 to 2020.

(vi) Free Cash Flow/Net Sales

10 year Free cash flow growth of Nestle HUL Britannia Dabur and Godrej
10 year Free cash flow trend of Nestle HUL Britannia Dabur and Godrej

This Ratio indicates how much of a Company’s Revenue is transformed into Free Cash. A higher FCF to Sales ratio is always better, as it indicates a greater capacity of a Company to turn Sales into Cash.

In the year 2020, HUL maintains high FCF to Sales Ratio as compared to its Peer Group Companies i.e. 16.99%. On the other hand, Nestle India’s FCF/Net Sales stands at 14.80% in the year 2020.

In the F.Y. 2019-20, FCF to Net Sales Ratio of Godrej and Dabur India stand at 14.49% and 13.77% respectively. On the other hand, Britannia’s FCF/Net Sales ratio for the year 2020 is 10.69%, which is relatively low as compared to its Peer Group Companies.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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