A STUDY ON FUNDAMENTAL ANALYSIS OF FMCG INDUSTRY

INTRODUCTION

The FMCG sector in India expanded due to consumer-driven growth and higher product prices,
especially for essential goods. FMCG sector provides employment to around 3 million people
accounting for approximately 5% of the total factory employment in India. FMCG sales in the
country was expected to grow 7-9% by revenues in 2022-23. The key growth drivers for the sector
include favourable Government initiatives & policies, a growing rural market and youth
population, new branded products, and growth of e-commerce platforms. Resilience needs to be
the key factor in the manufacturing process, daily operations, retail and logistic channels,
consumer insights and communication that will help FMCG companies to withstand the test of
time and create more value for consumers in the long run. India’s fast-moving consumer goods
(FMCG) sector grew 7.5% by volumes in the April-June 2023 quarter, the highest in the last eight
quarters, led by a revival in rural India and higher growth in modern trade.

Fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector and has been
expanding at a healthy rate over the years because of rising disposable income, a rising youth
population, and rising brand awareness among consumers. With household and personal care
accounting for 50% of FMCG sales in India, the industry is an important contributor to India’s
GDP.

India is a country that no FMCG player can afford to ignore due to its middle-class population
which is larger than the total population of USA. The Indian FMCG market continues to rise as
more people start to move up the economic ladder and the benefits of economic progress become
accessible to the public. More crucially, with a median age of just 27, India’s population is
becoming more consumerist due to rising ambitions. This has been further aided by government
initiatives to increase financial inclusion and establish social safety nets.
Growing awareness, easier access and changing lifestyles have been the key growth drivers for the
sector. The urban segment (accounts for a revenue share of around 65%) is the largest contributor
to the overall revenue generated by the FMCG sector in India. However, in the last few years, the
FMCG market has grown at a faster pace in rural India compared to urban India. Semi-urban and
rural segments are growing at a rapid pace and FMCG products account for 50% of the total rural
spending.

India’s huge population has always been a significant factor for the growth of FMCG Sector in the
country. Between 1950 and 1980, the consumption of FMCG products Were relatively low due to
the low per capita income. The post-liberalization era in India Has witnessed a massive growth in
the selling of products in the domestic market. The Indian market also imported loads of products
from overseas markets which made Increased the competition between the organized and the
unorganized sector.

The easing of the trade barriers encouraged the MNCs to invest in the Indian market to Cater to
the needs of the consumers. The living standards rose in the urban sector due to High disposable
income along with the rise in the purchasing power of the rural families Which increased the sales
volume of various manufacturers of the FMCG products in India. The large-scale companies such
as HLL, Godrej Consumer, Marico, Henkel, Reckitt Benckiser and Colgate have targeted the rural
consumers and have also Expanded their retail chain in the mid-sized towns and villages. On the
contrary to this, Nestle has always targeted the market of urban India and focuses largely upon the
value Added products for the elite class or upper middle class population.
MNCs IN FMCG SECTOR

MNCs in FMCG Sector in India are doing very good business. The major FMCG Companies in
India are mostly Multi-National Companies (MNC), such as Nike, Reebok, Puma, Pepsi Co,
L’Oreal, etc. The experts believe that in the future the MNCs Would dominate the FMCG sector
India. The FMCG market consists of products such As personal care products, toiletries products,
cosmetics products, house care products, White goods, etc. The market is expected to witness the
emergence of large players.
MARKET SIZE

FMCG market reached US$ 167 billion as of 2023. Total revenue of FMCG market is expected to
grow at a CAGR of 27.9% through 2021-27, reaching nearly US$ 615.87 billion. In 2022, urban
segment contributed 65% whereas rural India contributed more than 35% to the overall annual
FMCG sales. Good harvest, government spending expected to aid rural demand recovery in FY24.
The sector had grown 8.5% in revenues and 2.5% in volumes last fiscal year. In the January-June
period of 2022, the sector witnessed value growth of about 8.4% on account of price hikes due to
inflationary pressures. In Q2, 2022, the FMCG sector clocked a value growth of 10.9% Y-o-Y
higher than the 6% Y-o-Y value growth seen in Q1.

Indian food processing market size reached US$ 307.2 billion in 2022 and is expected to reach
US$ 547.3 billion by 2028, exhibiting a growth rate (CAGR) of 9.5% during 2023-2028.

The Union government approved a new PLI scheme for the food processing sector, with a budget
outlay of Rs. 109 billion (US$ 1.46 billion). Incentives under the scheme will be disbursed for six
years to 2026-27.

Digital advertising will grow to reach US$ 9.92 billion by 2023, with FMCG industry being the
biggest contributor at 42% share of the total digital spend.
India includes 780 million internet users, where an average Indian person spends around 7.3 hours
per day on their smartphone, one of the highest in the world. Number of active internet users in
India will increase to 900 million by 2025 from 759 million in 2022. In 2021, India’s consumer
spending was US$ 1,891.90 billion. Indian villages, which contribute more than 35% to overall
annual FMCG sales, are crucial for overall revival of the sector. E-commerce now accounts for
17% of the overall FMCG consumption among evolved buyers, who are affluent and make average
spends of about Rs. 5,620 (US$ 68).

The Indian e-commerce market is anticipated to grow from US$ 83 billion in 2022 to US$ 185
billion in 2026. By 2030, it is expected to have an annual gross merchandise value of US$ 350
billion. Fuelling e-commerce growth, India is expected to have over 907 million internet users by
2023, which accounts for ~64% of the total population of the country.

The market has grown exponentially over the past five years due to the surge in internet and
smartphone users, improved policy reforms, and increase in disposable income. Mobile wallets,
Internet banking, and debit/credit cards have become popular among customers for making
transactions on e-commerce platforms. As of 2021, there were 1.2 million daily e-commerce
transactions. The total value of digital transactions stood at US$ 300 billion in 2021 and is
projected to reach US$ 1 trillion by 2026.

The India online grocery market size has been projected to grow from US$ 4,540 million in 2022
to US$ 76,761.0 million by 2032, at a CAGR of 32.7% through 2032.

The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220 billion
by 2025, from US$ 110 billion in 2020. The Indian FMCG industry grew by 16% in CY21 a 9-
year high, despite nationwide lockdowns, supported by consumption-led growth and value
expansion from higher product prices, particularly for staples. The Indian processed food market
is projected to expand to US$ 470 billion by 2025, up from US$ 263 billion in 2019-20.
FMCG giants such as Johnson & Johnson, Himalaya, Hindustan Unilever, ITC, Lakmé and other
companies (that have dominated the Indian market for decades) are now competing with D2C-
focused start-ups such as Mamaearth, The Moms Co., Bey Bee, Azah, Nua and Pee Safe. Market
giants such as Revlon and Lotus took ~20 years to reach the Rs. 100 crores (US$ 13.4 million)
revenue mark, while new-age D2C brands such as Mamaearth and Sugar took four and eight years,
respectively, to achieve that milestone.

Advertising volumes on television recorded healthy growth in the July-September quarter,

registering 461 million seconds of advertising, which is the highest in 2021. FMCG continued to
maintain its leadership position with 29% growth in ad volumes against the same period in 2019.
Even the e-commerce sector showed a healthy 26% jump over 2020.

GOVERNMENT INITIATIVES

Some of the major initiatives taken by the Government to promote the FMCG sector in India are
as follows:

The Union Budget 2023–2024 offers incentives for advances in food infrastructure research &
development, and innovation, which is extremely encouraging for the FMCG sector’s modest
growth.

The Union government approved a new PLI scheme for the food processing sector, with a budget
outlay of Rs. 109 billion (US$ 1.46 billion). Incentives under the scheme will be disbursed for six
years to 2026-27.

The government’s initiative to promote millets for its health benefits would increase the
consumption and production of the millets in the nation. To support this, the government declared
that the Indian Institute of Millet Research in Hyderabad will become a worldwide centre of
excellence for the exchange of best practices, knowledge, and innovations.

In 2022, Government announced that the food processing industry has invested Rs. 4,900 crores
(US$ 593 million) so far under the PLI scheme, which was approved in March 2021, with a budget
outlay of Rs. 10,900 crores (US$ 1.3 billion), likely to increase sales and exports of food products.
A total of 182 applications have been approved under the PLI scheme for the food processing
industry. This includes 30 applications for millets-based products under the PLI scheme (8 large
entities and 22 SMEs)

In 2022, a total of 112 food processing projects were completed and operationalized, leveraging
the private investment of Rs. 706.04 crores (US$ 85.4 million) and generating direct and indirect
employment for 25,293 people.

To boost the food processing sector, the Centre has permitted under the Income Tax Act a
deduction of 100% of profit for five years and 25% of profit in the next five years in case of new
agro-processing industries set up to package and preserve fruits and vegetables.

Excise Duty of 16% on dairy machinery has been fully waived off and excise duty on meat, poultry
and fish products has been reduced from 16% to 8%.

An amount of Rs. 1,000 crores (US$ 120.7 million) is being set up initially in NITI Aayog for
SETU for setting up of incubation centres and enhance skill development to facilitate the start-up
ecosystem in the country while improving the ease of doing business.

The governments’ incentives and the FDI funds have helped the FMCG sector strengthen
employment, establish a more robust supply chain, and capture high visibility for FMCG brands
across established retail markets.

Union Budget 2023-24 has allocated US$ 976 million for PLI schemes that aims to reduce import
costs, improve the cost competitiveness of domestically produced goods, increase domestic
capacity, and promote exports.

As per the Union Budget 2022-23:

Rs. 1,725 crores (US$ 222.19 million) has been allocated to the Department of Consumer Affairs

Rs. 215,960 crores (US$ 27.82 billion) has been allocated to the Department of Food and Public
Distribution.

In 2021-22, the government approved Production Linked Incentive Scheme for Food Processing
Industry (PLISFPI) with an outlay of Rs. 10,900 crores (US$ 1.4 billion) to help Indian brands of
food products in the international markets.
The government’s production-linked incentive (PLI) scheme gives companies a major opportunity
to boost exports with an outlay of US$ 1.42 billion.

In November 2021, Flipkart signed an MoU with the Ministry of Rural Development of the
Government of India (MoRD) for their ambitious Deendayal Antyodaya Yojana – National Rural
Livelihood Mission (DAY-NRLM) programme to empower local businesses and self-help groups
(SHGs) by bringing them into the e-commerce fold.

Companies are counting on recent budget announcements like the direct transfer of 2.37 lakh
crores (US$ 30.93 billion) in minimum support payment (MSP) to wheat and paddy farmers and
the integration of 150,000 post offices into the core banking system to expand their reach in rural
India.

The Government of India has approved 100% FDI in the cash and carry segment and in single-
brand retail along with 51% FDI in multi-brand retail.

The Government has drafted a new Consumer Protection Bill with special emphasis on setting up
an extensive mechanism to ensure simple, speedy, accessible, affordable, and timely delivery of
justice to consumers.

The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of the FMCG
products such as soap, toothpaste and hair oil now come under the 18% tax bracket against the
previous rate of 23-24%. Also, GST on food products and hygiene products has been reduced to
0-5% and 12-18% respectively.

GST is expected to transform logistics in the FMCG sector into a modern and efficient model as
all major corporations are remodelling their operations into larger logistics and warehousing.
ROAD AHEAD

Rural consumption has increased, led by a combination of increasing income and higher aspiration
levels. There is an increased demand for branded products in rural India. On the other hand, with
the share of the unorganised market in the FMCG sector falling, the organised sector growth is
expected to rise with an increased level of brand consciousness, augmented by the growth in
modern retail. Another major factor propelling the demand for food services in India is the growing
youth population, primarily in urban regions. India has a large base of young consumers who form
most of the workforce, and due to time constraints, barely get time for cooking. Online portals are
expected to play a key role for companies trying to enter the hinterlands. The Internet has
contributed in a big way, facilitating a cheaper and more convenient mode to increase a company’s
reach. The number of internet users in India is likely to reach 1 billion by 2025. It is estimated that
40% of all FMCG consumption in India will be made online by 2020. E-commerce share of total
FMCG sales is expected to increase by 11% by 2030. It is estimated that India will gain US$ 15
billion a year by implementing GST. GST and demonetisation are expected to drive demand, both
in the rural and urban areas and economic growth in a structured manner in the long term and
improved the performance of companies Within the sector.
Major FMCG cities

• Chandigarh
• Maharashtra
• Tamil Nadu
• Gujarat
• Punjab

Top Ten Players in FMCG Sector

• Hindustan Unilever Limited (HUL)

• Colgate-Palmolive

• ITC Limited

• Nestlé

• Parle Agro

• Britannia Industries Limited

• Marico Limited

• Procter and Gamble

• The Godrej Group

• Amul
Other major players in the industry

• Dabur

• GlaxoSmithkline Consumer Healthcare ltd.

• Emami Ltd.

• Reckitt Benckiser

• Johnson & Johnson

• Nirma ltd.

• Cadbury India

GROWING DEMAND

• Indian food processing market size reached US$ 307.2 billion in 2022 and is expected to
reach US$ 547.3 billion by 2028, exhibiting a growth rate (CAGR) of 9.5% during 2023-
2028.
• Digital advertising will grow to reach US$ 9.92 billion by 2023, with the FMCG industry
being the biggest contributor at 42% share of the total digital spend.

ATTRACTIVE OPPORTUNITIES

• Entrepreneurs interested in setting up the food-related FMCG industry can set up their
processing units in the government-designated agro-processing clusters, which helps cut
down the plant setup costs.
• With the advent of online retail and e-commerce, FMCG businesses are able to market and
sell their products across the country without investing much in marketing activities.
POLICY SUPPORT

• Union Budget 2023-24 has allocated US$ 976 million for PLI schemes that aims to reduce
import costs, improve the cost competitiveness of domestically produced goods, increase
domestic capacity, and promote exports.
• Union budget 2023-24 focuses on reviving rural demand by boosting disposable income,
allocation to farms and higher fund allocation on rural infrastructure, connectivity, and
mobility to create long-term jobs.

HIGHER INVESTMENTS

• In January 2023, ITC announced plans to acquire 100% of Sproutlife Foods, a D2C startup
and parent company of health food brand ‘Yoga Bar’ over a period of three to four years.
• In December 2022, Hindustan Unilever Limited announced its foray into the ‘Health &
Wellbeing’ category through strategic investments in Zywie Ventures Private Limited
(“OZiva”) and Nutritionalab Private Limited (“Wellbeing Nutrition”).
SIGNIFICANCE AND NEEDS OF THE ANALYSIS

The significance and needs of fundamental analysis of the FMCG (Fast-Moving Consumer Goods)
industry from an investor’s perspective are multifaceted. This industry encompasses a wide range
of everyday items that are quick to leave the shelves and include everything from food and
beverages to personal care products. Here’s why fundamental analysis is crucial for investors
eyeing the FMCG sector:

1. Understanding Market Dynamics: Fundamental analysis helps investors grasp the complex
dynamics of the FMCG sector, including consumer behaviour trends, supply chain
efficiencies, and competitive landscape. This sector is influenced by economic cycles, but
it tends to be more resilient during downturns because it deals with essential goods.
2. Assessing Company Health: It involves a deep dive into a company’s financial statements
balance sheet, income statement, and cash flow statement to evaluate its financial health.
Metrics such as sales growth, profit margins, return on equity (ROE), and debt levels are
crucial for understanding a company’s performance and sustainability within the FMCG
sector.
3. Valuation: Fundamental analysis is essential for determining the intrinsic value of FMCG
companies. By analysing financial ratios and metrics, investors can identify undervalued
or overvalued stocks. This is particularly important in the FMCG industry, where
companies might command premium valuations due to brand strength and consumer
loyalty.
4. Dividend Yield: Many FMCG companies offer consistent dividends due to their steady
cash flow. Fundamental analysis helps in assessing the sustainability of these dividends,
which is a significant factor for income-focused investors.
5. Growth Prospects: While the FMCG sector is known for stability, it also offers growth
opportunities, especially in emerging markets. Fundamental analysis enables investors to
identify companies with the potential for expansion and market penetration, leveraging
demographic shifts and consumption trends.
 6. Risk Management: Understanding the risks, including operational, regulatory, and market
risks, is crucial for making informed investment decisions. Fundamental analysis provides
a comprehensive view of these risks by evaluating the external and internal factors
affecting the industry and individual companies.
7. Long-Term Perspective: Given the FMCG sector’s nature, investors often hold these stocks
for the long term, benefiting from compounding dividends and growth. Fundamental
analysis helps in selecting companies with a sustainable competitive advantage and solid
growth trajectory, crucial for long-term wealth creation.
8. Consumer Behaviour and Brand Perception: Analysing consumer preferences, brand
Loyalty, and perception of a company’s products is crucial. Strong brand value and positive
Consumer sentiment often translate into better sales and market positioning.

In summary, fundamental analysis in the FMCG sector equips investors with the insights needed
to make informed decisions, balancing between seeking stable returns through established
companies and identifying growth opportunities in a constantly evolving consumer landscape.
REVIEW OF LITERATURE

According to Dr. Pramod H. Patil, Assistant Professor, School of Management Sciences, Sub-
centre Latur, Volume:5, Issue:2, February 2016, FMCG sector is recession proof and have
created huge employment opportunities in India, hencebecoming one of the key pillars of
Indian economy. He says that competition coming from the unorganized sector can be
overcome by increasing brand awareness and reducing cost through sharing resources
such as distribution network and the future of FMCG sector is bright as favourable
movements in demand and supply side of this sector.

According to Dr. N. Manicka Mahesh, Assistant Professor, school of Management, Sri

Krishna College of Engineering and Technology, Coimbatore,Volume:6,Issue:5, may 2016, if
the foundation of the company is strong then the performance of the company will be everlasting
nature. Pricing of the scripts do not depend on the euphoria built among the market participants,
but the valuation matters. It is better to trade and invest with the scripts which are fundamentally
strong in nature.

According to Dr. G. Sudarsana Reddy, Associate Professor, Department of Studies Research in

Commerce, Volume 4, Issue 1, January 2013, while taking the investment decision,
the investor should take relevant information. The analysis like fundamental and technical are
very important to make better decision of buying and selling shares. Investing in
share market is risky and long term investment are always more preferable than short term
investment so the investor should prefer long term investment like equity stocks.

Ross et.(2007) expressed most researchers divide the financial ratios into four group.
Profitability, solvency, Liquidity and activity ratios.
Brigham and Ehrhardt(2010) stated the financial ratios are designed to help evaluate financial
statements. Financial ratios are used as a planning and control tool. Financial ratio analysis is
used to evaluate the Performance of an organization.

Bagchi and Khamrui(2012) evaluated the financial performance of the two leading FMCG
companies, Britannia industries and Dabur India, over a period of 10 years(2000-2010) using
various accounting ratios And statically tools.

R. Amsaveni and S. Gomathi(2013) found that through economic analysis the GNP, Interst rate,
Exchange Rate, FER, Agriculture production, Govt. Receipts and Expenses has a growth rate
during the study period. The company analysis done with the help of ratio analysis indicates that
Colgate and HUL Companies are Financially in satisfactory position during the study period.

Ms. J. Hema and V. Ariram(2016) found that Indian FMCG industry has a high growth rate and
its sales and Net profit also shows increasing trend and the company analysis revealed that its
financial performance.

S. Bansal, G. Singh (2017) conducted a study on Indian FMCG companies. The main objective
of the study was to examine the fundamental analysis of the selected FMCG companies. In this
analysis he used one way ANOVA test. He found that there is significant difference between the
selected variables (Net profit margin, ROCE, EPS, DPS, Dividend pay-out ratio) of the selected
companies.

T. Mallikarjunappa and Shaini Naveen (2016) They conducted a study on Comparative analysis
of Risk and Return with reference to stocks of CNX Bank Nifty. This study analyzes the risk and
returns in the banking sector
Dr. S. Krishnaprabha and Mr. M. Vijaykumar (2015) They conducted a study on Risk and
Return Analysis of selected stocks in India. Risk and Return analysis plays an important role in
the decision making.

Soumya, P., Deepthi, L. N., (2019) told that financial analysis is a method of reviewing and
analyzing a company’s accounting reports (financial statements) so as to urge a far better
understanding of its past, present, and future performance. the method of reviewing financial
statements helps to form better economic decisions. Around the world, it is legal for publicly
traded companies to submit their financial statements to the appropriate authorities. Some
companies within the United States must file reports with the Securities and Exchange
Commission (SEC). Firms are obligated to produce their financial statements within the annual
report they share with their stakeholders.

PARMAR, S. S. (2017) researched that the entire F.M.C.G. Market is above Rs. 85,000. The
company is growing rapidly and is expected to maintain this growth trajectory. The fast-moving
consumer goods (FMCG) industry is projected to be worth Rs 4 trillion by 2020. The process of
measuring a firm's financial performance in monetary terms is used to understand how well the
company is doing overall, and can also be used to compare similar companies or sectors. In this
study, ratio analysis is used to evaluate the overall financial efficiency of seven chosen FMCG
companies in India. The study was conducted to suggest ways to improve the financial efficiency
of the units selected for improvement.
Abbasi, Habiba. (2017) researched that by 2020, the Indian FMCG market is expected to more
than double to $104 billion from its current level of $49 billion. Ratio analysis, which plays a
very important role and is an integral part of the financial statements of any company, was used
to evaluate various aspects of FMCG's operating and financial activities, such as its efficiency,
liquidity, profitability. The present study focuses on examining how HUL and ITC compare on
various factors. HUL has over 16,000 employees and had an annual turnover of around
Rs.19,400 in 2010-2011. ITC has a market capitalization of over $40 billion and annual turnover
of $8 billion. The ITC group's contribution to foreign income during the last ten years amounted
to almost US$ 6.6billion, of which agriculture exports constituted 57%.

Patel, Harish., Patel, Dr. V. B. (2018) aimed to analyze fundamental position of major listed
FMCG companies using ratios. The aim of study is P&G, NESTLE, ITC, DABUR, and HUL.
Analysis was done using past three-year computed date of income Margin Ratio, profits margin,
Price to Earnings, Debt to equity ratio, Dividend payout ratio, Earnings per share starting April
2016 to March 2018.This study provides a specific presentation of data and guidelines which can
help a fresh investor likewise as a venture investor to understand vital aspects of investing. This
study helps to the investors to make a decision on a secure investment and to identify the
expansion opportunities within the long run.
RESEARCH METHODOLOGY

The data is Secondary Data. The data was carried out concerning various research subject.
Numerous consultations were carried out from previous research reports, projects and articles that
Relate to the topic. Therefore, the study embraced the form of a new analysis based on previous
Research reviews and projects.

The study is Fundamental Analysis of FMCG Industry of India which primarily deals with The
Balance sheet, Profit and loss, various Ratios of selected companies from Indian FMCG Industry.
The Balance sheet and Profit and loss is taken from the official sites of the Financial services such
as Money control for last 3 Financial Years, FY21 FY22 AND FY23.

The companies which are selected for the Analysis are •

• ITC ltd.

• Nestle India ltd.

• Britannia Industries ltd.

• Tata Consumer Products ltd.

The companies are selected based on their,

• Market capitalisation

• Market competition

• Company valuation

• Company financials.
OBJECTIVES

• To study the overview of the FMCG Industry.

• To evaluate the financial performance using various fundamental factors.

• To study the fundamental factors of selected FMCG companies.

• To assist the investors in making the investment decision in the FMCG Industry.
FUNDAMENTAL ANALYSIS

Fundamental analysis uses a company’s revenues, earnings, future growth, return on equity, profit
margins, and other data to determine a company’s underlying value and potential for future growth.

Fundamental analysis (FA) measures a security’s intrinsic value by examining related economic
and financial factors. Intrinsic value is the value of an investment based on the issuing company’s
financial situation and current market and economic conditions.

Fundamental analysts study anything that can affect the security’s value, from macroeconomic
factors such as the state of the economy and industry conditions to microeconomic factors like the
effectiveness of the company’s management.

The end goal is to determine a number that an investor can compare with a security’s current price
to see whether the security is undervalued or overvalued by other investors.

Key Takeways

Fundamental analysis is a method of determining a stock’s real or “fair market” value.

Fundamental analysts search for stocks currently trading at prices higher or lower than their real
value.

If the fair market value is higher than the market price, the stock is deemed undervalued, and a buy
recommendation is given.

If the fair market value is lower than the market price, the stock is deemed overvalued, and the
recommendation might be not to buy or to sell if the stock is held.

In contrast, technical analysts favour studying the historical price trends of the stock to predict
short-term future trends.

Understanding Fundamental Analysis

Fundamental analysis is usually done from a macro to micro perspective to identify securities that
are not correctly priced by the market.
The things we can study in Fundamental Analysis.

• Balance sheet (Revenue and Earnings)

• Profit and loss
• Ratios
• SWOT analysis
• Future Growth plans
• Balance Sheet

Fundamental analysts, when valuing a company or considering an investment opportunity,

normally start by examining the balance sheet. This is because the balance sheet is a snapshot of a
company’s assets and liabilities at a single point in time, not spread over the course of a year such
as with the income statement.

The balance sheet contains a lot of important information, some of which are more important to
focus on to get a general understanding of the solvency and business dealings of a company.

Why Balance Sheets Are Important to Analysis

They say that “the numbers don’t lie,” and that is true more for financial analysis than anything
else. Balance sheets are important for many reasons, but the most common ones are: when a merger
is being considered, when a company needs to consider asset liquidation to prop up debt, when an
investor is considering a position in a company, and when a company looks inward to determine
if they are in a stable enough financial situation to expand or begin paying back debts.

Many experts consider the top line, or cash, the most important item on a company’s balance sheet.
Other critical items include accounts receivable, short-term investments, property, plant, and
equipment, and major liability items. The big three categories on any balance sheet are assets,
liabilities, and equity.
Profit and Loss

Importance of a P&L

Determining the performance of a business – P&L help measure any business’s success. It enables
business leaders and managers to determine which tasks are helping the business to gain more ROI
or where they are losing money.

It helps to get to know about,

• Income
• Operating Expenses/ Income
• Sales
• Gross profit
• Net profit

Ratios

Ratio analysis is a quantitative method of gaining insight into a company’s liquidity, operational
efficiency, and profitability by studying its financial statements such as the balance sheet and
income statement. Ratio analysis is a cornerstone of fundamental equity analysis.

Ratio analysis compares line-item data from a company’s financial statements to reveal insights
regarding profitability, liquidity, operational efficiency, and solvency.

Ratio analysis can mark how a company is performing over time, while comparing a company to
another within the same industry or sector.

Ratio analysis may also be required by external parties that set benchmarks often tied to risk.

While ratios offer useful insight into a company, they should be paired with other

Metrics, to obtain a broader picture of a company’s financial health.

Examples of ratio analysis include current ratio, gross profit margin ratio, inventory turnover ratio.
Ratios

• Market Value Ratio

1. Earning Per share
2. PE Ratio
• Risk and Return
1. Beta
2. Standard Deviation
• Leverage Ratio
1. Debt Ratio
2. Debt to Equity Ratio
• Profitability Ratio
1. Return on Equity Ratio
• Liquidity Ratio
1. Current Ratio

Beta

Beta is a concept that measures the expected move in a stock relative to movements in the overall
market. A beta greater than 1.0 suggests that the stock is more volatile than the broader market,
and a beta less than 1.0 indicates a stock with lower volatility.

Standard Deviation

In investing, standard deviation is used as an indicator of market volatility and thus of risk. The
more unpredictable the price action and the wider the range, the greater the risk.

Range-bound securities, or those that do not stray far from their means, are not considered a great
risk. That’s because it can be assumed—with relative certainty—that they continue to behave in
the same way. A security with a very large trading range and a tendency to spike, reverse suddenly,
or gap is much riskier, which can mean a larger loss.
SWOT Analysis

SWOT analysis is a framework for identifying and analysing an organization’s strengths,

weaknesses, opportunities and threats. These words make up the SWOT acronym.

The primary goal of SWOT analysis is to increase awareness of the factors that go into making a
business decision or establishing a business strategy. To do this, SWOT analyses the internal and
external environment and the factors that can impact the viability of a decision.

Businesses commonly use SWOT analysis, but it is also used by non-profit organizations and, to
a lesser degree, individuals for personal assessment. SWOT is also used to assess initiatives,
products or projects. As an example, CIOs could use SWOT to help create a strategic business
planning template or perform a competitive analysis.

SWOT analysis is often used either at the start of, or as part of, a strategic planning process. The
framework is considered a powerful support for decision-making because it enables an
organization to uncover opportunities for success that were previously unarticulated. It also
highlights threats before they become overly burdensome.

SWOT analysis can identify a market niche in which a business has a competitive advantage. It
can also help individuals plot a career path that maximizes their strengths and alert them to threats
that could thwart success.

Future Growth Plans

Creating a future growth plan helps businesses become what they want to be, whether that’s one,
two, five or ten years down the line. It helps establish a shared vision and a set of common goals,
making it easier to align teams and pitch to investors. Most of all, helps businesses stay on the
course to success. Now, here is the analysis between the 4 Main companies of Automobile
Industry. The companies are selected on the basis of their Market share, Market capitalisation,
their contribution to the market. Which will help us to get to know about the Automobile Industry
of India.
ITC LTD.

Established in 1910, ITC is the largest cigarette manufacturer and seller in the country. ITC
operates in five business segments at present - FMCG Cigarettes, FMCG Others, Hotels,
Paperboards, Paper and Packaging, and Agri Business.

KEY POINTS

Geographical Distribution

For FY22, India accounted for 78% of ITC’s revenue while rest was from exports.

FMCG – Cigarettes

ITC is the leader in the organised domestic cigarette market with a market share of over 80%. It’s
wide range of brands include Insignia, India Kings, Classic, Gold Flake, American Club, Wills
Navy Cut, Players, Scissors, Capstan, Berkeley, Bristol, Flake, Silk Cut, Duke & Royal.

Despite this vertical contributing only 40% to the revenues, it is the most profitable business of
the company with 81% contribution towards PBIT.

Industry: India is the 4th largest market for illegal cigarettes. While the consumption rate of legal
cigarettes is only 1/10th in the tobacco industry, It accounts for 4/5th Tax revenue share. Legal
cigarette industry remains under pressure due to growth in illicit duty-evaded cigarette
consumption.
FMCG – Others

ITC has 25 mother brands spread across multiple FMCG sectors. Popular brands include:

• Packaged foods: Aashirvaad, Sunfeast, Bingo, Yippee noodles, Candyman and mint-o
• Personal Care: Savlon, Fiama, Vivel and Superia
• Stationary: Classmate and Paperkraft
• Apparels: WLS
• Agarbattis: Mangaldeep and AIM (matches)
• ‘ITC e-Store’, the Company’s exclusive D2C platform, is operational in 24,000+ pin-
codes.

Hotels Business

Launched in 1975, ITC Hotels is one of the fastest growing hospitality chains in India. It is the
second-largest hotel chain in India, with 108 hotels at 70 locations in the country, operating across
multiple market segments. It possess a room inventory of ~290,000 rooms.

It’s hotels are classified under 4 distinctive brands.

- ITC Hotels: which has an exclusive tie up with Marriott International Inc’s ‘The Luxury
Collection’.

- Welcomhotels: which offers 5-star hospitality for the discerning business & leisure traveller.

- Fortune Hotels: which operates in mid-market to upscale properties hotel segment all over India.

- WelcomHeritage: which brings together a chain of palaces, forts, havelis & resorts that offer
unique experience.

In H1FY24, they added 3 new properties to the Group portfolio including ‘WelcomHeritage Santa
Roza, Kasauli’, ‘Fortune Park Hoshiarpur’ and ‘Fortune Ranjit Vihar, Amritsar.
Agri. Business

ITC is the second largest exporter of agri products from the country. It trades in feed ingredients,
food grains, marine products, processed fruits, coffee etc.

It also exports leaf tobacco under this vertical. ITC is India’s largest and world’s 5th largest leaf
tobacco exporter.

In H1FY24, ITC IndiVision Limited (IIVL), (WOS) received requisite regulatory approvals for its
facility to manufacture Nicotine & Nicotine Derivative products conforming to US &

EU pharmacopoeia standards.

Paperboards, Paper & Packaging

ITC is the market leader in value added paperboards segment. It is also India’s largest converter
of paperboard into high quality packaging. ITC manufactures the entire spectrum of paperboards
– from 100% virgin, food-grade boards which are made from renewable and sustainable sources
to 100% recycled boards.

Revenue Split FY23

• Cigarettes : 37% (vs ~57% in FY17)

• FMCG : 23%
• Hotels : 3%
• Paperboards & Packaging :11%
• Agri : 23%

Demerger of Hotel Business

In Aug,23, the company has approved to dmerge its hotels business into a new entity ITC Hotels
Limited. ITC will continue to have a 40% shareholding in the new entity and the balance 60% will
be held by ITC’s existing shareholders in the proportion of their shareholding in ITC.
Share Holding Pattern

Fig. 1

The Shareholding Pattern shows the investment of promoters, FII, DII, government, Retail
Investors.
Balance Sheet

Fig.2

The above given Balance sheet shows us all the figures of Current assets, current liabilities, Total
assets, Total Equity, Shareholders funds and many things related to ITC Ltd.
Profit and Loss

Fig.3

The above given Profit and loss statement shows us the last 3 years Sales, expenses, profit before
Tax, Net profit of ITC ltd.

As we can see the profit of the company is increasing year on year. So it is one of the positive side
Of the company that they are in a growing stage.
Ratios

Earning Per share (EPS)

(Figures are in Crores)

The Calculation of EPS is based on the Data Given in the Balance sheet of last 3 Financial
Years.

EPS = NET INCOME/ NO. OF SHARES

Year Net Income No. Of Shares EPS

2020-21 13383 1230.88 10.87

2021-22 15503 1232.33 12.58

2022-23 19447 1242.80 15.67

Table 1

The EPS here is increasing year on year which is good for the company and investors.

PE Ratio

The Calculation of PE Ratio is based on the Data collected from the Market and above EPS

Calculation.

PE RATIO= SHARE PRICE/EPS

Year Share Price EPS PE

2020-21 212 10.87 19.50

2021-22 334 12.58 26.55

2022-23 346 15.67 22.08

Table 2

Here the PE ratio is in good range as per the share price fluctuations.
Current Ratio

The current ratio measures how a business’s current assets, such as cash, cash equivalents,
Accounts receivable, and inventories, are used to settle current liabilities such as accounts Payable.

Current Ratio = Current Assets/ Current Liability

Year Current Assets Current Liabilities CR

2020-21 31815.24 10173.95 3.12

2021-22 30942.01 11478.09 2.69

2022-23 35203.44 12415.62 2.83

Table 3

Current ratio is good as per the Assets and Liabilities of the company.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage

Debt Ratio= Total Liabilities/Total Asset

Year Total Liabilities Total Assets DR

2020-21 12576 71580 0.17

2021-22 13692 75092 0.18

2022-23 14667 82261 0.17

Table 4

The company is managing their Debts well, the number of Assets are good in front of Liabilities.
Debt to Equity Ratio

The debt-to-equity ratio measures a company’s debt liability compared to shareholders’ equity.
This ratio is important for investors because debt obligations often have a higher priority if a
company goes bankrupt.

Debt to Equity Ratio= Total Debts/ Shareholders funds

Year Total Debts Shareholders Funds DE

2020-21 12576 59004 0.21

2021-22 13692 61399 0.22

2022-23 14667 67593 0.21

Table 5

The Debt to Equity ratio is constant for last 3 FY.

Return on Equity Ratio

Return on equity (ROE) is the measure of a company’s net income divided by its shareholders’
Equity. ROE is a gauge of a corporation’s profitability and how efficiently it generates those
Profits.

ROE Ratio = Net Income/Shareholders funds

Year Net Income Shareholders Funds ROE

2020-21 13383 59004 0.22

2021-22 15503 61399 0.25

2022-23 19447 67593 0.28

Table 6

The Return on Equity is also in good range.

Beta and Standard Deviation

The Calculation of Beta and the SD is totally based upon the last 3 years Market prices of

ITC Ltd. And the Nifty market returns.

Fig. 4

As per the calculation of Beta and SD, the volatility and the risk pattern are good, so here we can
Say the company is good for investment.

SWOT Analysis

Strengths

• Diversified portfolio
• Strong Brand Equity
• Extensive Distribution Network
• Sustainable practices
• Strong R&D capabilities

Weakness

• Dependency on Cigarette Business

• Geographic concentration
• Slow adoption of E commerce
• High Debt levels
• Vulnerability to Commodity price volatility

Opportunity

• Growing FMCG Market

• Expansion of Emerging Markets
• Focus on Health and Wellness
• Acquisition and Partnership
• Adoption of E commerce

Threats

• Intense Competition
• Changing Regulatory Landscape
• Rising Input Costs
• Rapid Technological Advancements
• Environmental Factors
Future Growth Plans

ITC Ltd chairman and managing director Sanjiv Puri said the company will accelerate investments,
which had slowed during the pandemic, with a corpus of around Rs 3,000 crores annually for the
next few years, primarily for building manufacturing capacities and accelerating growth.

He also expects the fast-moving consumer goods (FMCG) industry to bounce back by volume
sales growth from the next fiscal year, led by rural demand, with early signs of recovery already
visible. He said the revival will be accelerated, with inflation cooling and product prices correcting.
NESTLE INDIA LTD

Nestle India Limited is a subsidiary of Nestle which is a Swiss MNC. The company operates in
the Food segment.

Business Overview

Nestle India a subsidiary of Nestle S A (holds 62% stake) is primarily involved in the Food
business which incorporates product groups viz. Milk Products and Nutrition, Prepared dishes and
Cooking aids, Powdered and Liquid Beverages and Confectionery. It owns brands such as
NESCAFÉ, MAGGI, MILKYBAR, KIT KAT, BAR-ONE, MILKMAID, NESTEA etc. [1]

India’s leading FMCG Player

It is among the top two players in most of its product categories, including milk products and
nutrition, beverages, prepared dishes and cooking aids, and chocolate and confectionery. It has
10,000+ distributors and 5.2 million outlets.

Revenue Breakup

Milk Products And Nutrition (40%) – Dairy Products, Milk Powder, CEREGROW and Weaning
foods

Prepared Dishes And Cooking Aids (32%) – Maggi, MAGGI Masala-ae-Magic, Sauces, Cereals

Confectionery (17%) – Kit Kat, Munch, Milkybar, Sugar confectionery

Beverages (11%) – Instant coffee

Geographic Wise

• Domestic – 96%
• Export – 4%

Manufacturing Facilities

It has 9 manufacturing facilities located in Moga (Punjab), Choladi (Tamil Nadu), Nanjangud
(Karnataka), Samalkha (Haryana), Ponda (Goa), Bicholim (Goa), Pantnagar (Uttarakhand),
Tahliwal (HP) and Sanand (Gujarat).

Capacity Expansion

Company is setting up its 10th Manufacturing facility in Odisha. Between 2020 and 2023, the
Company has spent almost Rs. 2600 Cr and for 2023 to 2025 it has committed Rs 5000 Cr. Out of
that Rs 900 to Rs 1000 Cr already in the Odisha factory has been committed.

Divestment

Approved slump sale of Nestlé Business Services Division of the Company to Purina PetCare
India Private Limited, a related party for Rs ~80 Cr. NBS Division predominantly provides captive
services to the Company across four End-to-End Services (Order to Cash, Source to Pay, Record
to Report and Hire to Retire).

Direct to Consumer

Company launched its first ever ‘direct to consumer’ (D2C) platform – www.mynestle.in, that
offers products manufactured by the company in India.

Product Launches

Company has launched 130 new products in the last 7 years and its many new projects are in the
pipeline. Some of its recent launches include MAGGI Korean noodles, MAGGI Oats Noodles with
Millet Magic and GERBER Puffs.
Millet Based Products

Nestlé R&D Centre India in 2022 had signed an MOU with Nutrihub, ICAR-Institute of Millet
Research with the aim of collaborating in areas such as millet processing, understanding health
and nutrition benefits of millets in different product applications. It recently launched Nestlé a+
Masala Millet that contains bajra. It has already launched Nestlé CEREGROW Grain Selection
with ragi, Nestlé MILO Cocoa Malt with bajra and Nestlé KOKO KRUNCH Millet-Jowar
breakfast cereals.

Share Holding Pattern

Fig. 5

The Shareholding Pattern shows the investment of promoters, FII, DII, government, Retail
Investors.
Balance Sheet

Fig. 6

The above given Balance sheet shows us all the figures of Current assets, current liabilities, Total
assets, Total Equity, Shareholders funds and many things related to Nestle India Ltd.
Profit and Loss

Fig. 7

The above given Profit and loss statement shows us the last 3 years Sales, expenses, profit before
Tax, Net profit of Nestle India ltd.

As we can see the profit of the company is increasing year on year. So it is one of the positive side
Of the company that they are in a growing stage.
Ratios

Earning Per share (EPS)

(Figures are in Crores)

The Calculation of EPS is based on the Data Given in the Balance sheet of last 3 Financial
Years.

EPS = NET INCOME/ NO. OF SHARES

Year Net Income No. Of Shares EPS

2020-21 2118 96.42 21.96

2021-22 2391 96.42 24.79

2022-23 2999 96.42 31.10

Table 7

The EPS here is increasing year on year which is good for the company and investors.

PE Ratio

The Calculation of PE Ratio is based on the Data collected from the Market and above EPS

Calculation.

PE RATIO= SHARE PRICE/EPS

Year Share Price EPS PE

2020-21 1957.13 21.96 89.12

2021-22 2042.25 24.79 82.38

2022-23 1848.58 31.10 59.43

Table 8

Here the PE ratio is in good range as per the share price fluctuations.
Current Ratio

The current ratio measures how a business’s current assets, such as cash, cash equivalents,
Accounts receivable, and inventories, are used to settle current liabilities such as accounts
Payable.

Current Ratio = Current Assets/ Current Liability

Year Current Assets Current Liabilities CR

2020-21 2738 2603 1.05

2021-22 3490 3079 1.13

2022-23 3593 3790 0.94

Table 9

Current ratio is good as per the Assets and Liabilities of the company.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage

Debt Ratio= Total Liabilities/Total Asset

Year Total Liabilities Total Assets DR

2020-21 5858 8209 0.71

2021-22 6518 8978 0.72

2022-23 7000 10094 0.69

Table 10

There is good balance between Assets and Liabilities.

Debt to Equity Ratio

The debt-to-equity ratio measures a company’s debt liability compared to shareholders’ equity.
This ratio is important for investors because debt obligations often have a higher priority if a
company goes bankrupt.

Debt to Equity Ratio = Total Debts/ Shareholders funds

Year Total Liabilities Shareholders Funds DE

2020-21 5858 2084 2.81

2020-22 6518 2459 2.65

2022-23 7000 3092 2.26

Table 11

The Debt to Equity Ratio is constant for last 3 FY.

Return on Equity Ratio

Return on equity (ROE) is the measure of a company’s net income divided by its shareholders’
Equity. ROE is a gauge of a corporation’s profitability and how efficiently it generates those
Profits.

ROE Ratio = Net Income/Shareholders funds

Year Net Income Shareholders Funds ROE

2020-21 2118 2084 1.01

2021-22 2391 2459 0.97

2022-23 2999 3092 0.96

Table 12

The ROE is in the same range for last 3 FY.

Beta and Standard Deviation

The Calculation of Beta and the SD is totally based upon the last 3 years Market prices of

Nestle India Ltd. And The Nifty market returns.

Fig. 8

As per the calculation of Beta and SD, the volatility and the risk pattern are good, so here we can
Say the company is good for investment.
SWOT Analysis

Strengths

• Highly Diversified Portfolio

• Largest Food Company
• Reputed Brand Name
• Brand Valuation
• Global Presence

Weaknesses

• Increases in Prices
• Span of control and Organisational Structure
• Water Controversy
• Social Criticism
• Maggie Noodles Controversy

Opportunity

• Venturing Small Food start-up

• Online Shopping
• Partnerships
• Expanding Ready to Drink Tea and Coffee Market

Threats

• Price Fluctuations by Retail Giants

• Government Regulations
• Rising Competition
• Economic Uncertainty
Future Growth Plans

By 2025, Nestlé India plans to invest INR 4,200 crores, which will be directed towards building a
tenth factory in Odisha and expanding the production capacity of its chocolate, coffee, and noodles
products. ‘We’ve made significant investments in Make-In-India.

Between 2020 and the first half of 2023, we have already invested approximately Rs 2,100 crores
in expanding our manufacturing capacity. An additional Rs 4,200 crores will be invested from
2023 to 2025,’ said Suresh Narayanan, Chairman, and Managing Director of Nestlé India.
BRITANNIA INDUSTRIES LTD.

Britannia Industries is one of India’s leading food companies with a 100 year legacy and annual
revenues in excess of Rs. 9000 Cr. Britannia is among the most trusted food brands, and
manufactures India’s favourite brands like Good Day, Tiger, NutriChoice, Milk Bikis and Marie
Gold which are household names in India. Britannia’s product portfolio includes Biscuits, Bread,
Cakes, Rusk, and Dairy products including Cheese, Beverages, Milk and Yoghurt.

Part of Wadia Group

Britannia Industries belongs to the Wadia Group, a reputed Indian Business house who has
presence in wide range of business segments like Airlines (Go Air), Realty ( Bombay Realty),
Textiles ( Bombay Dyeing) and Plantations and other business (Bombay Burmah trading
Corporation which is also the Ultimate holding company of Britannia Industries)

Market Leader in the Biscuit segment (90% of the revenue)

Britannia is one of leading players in the business segment with leading market share in the Indian
biscuit segment. The company has a wide range of Biscuits portfolio across various categories like
glucose, Marie, cookies, crackers, cream, milk, and health. The company sells the products under
various Iconic brands like Good Day, Tiger, Marie, Nutrichoice and Milk Bikis and any more.
Britannia Bread

The company is one of the largest player in the organised bread market with an annual turnover of
over 1 lac tons in volume and Rs.450 croress in value. The business operates with 13 factories and
4 franchisees selling close to 1 Mn loaves daily across more than 100 cities and towns of India.
The company is working on developing differentiated products like Atta pizza, cheese bread etc.

Dairy Products (5% of the revenue)

The company sells Cheese, Beverages, Milk and Yoghurt under this division and the dairy
products directly reach 100,000 outlets. The segment witnessed the highest growth especially in
the cheese products which grew 300% during the year and the company is planning to start 5 new
facilities. And to expand its Orissa plant it will improve its back end facilities by procuring 25000
Litre/day from 1000 farmers in Maharashtra

Distribution Network

The company has a PAN India presence and the products are available in more than 5 Million
retail stores across India and the products reach over 50% of the Indian homes.

Global Foot print

The company derives 5.5% of the revenue from the global Markets and exports the products to 80
countries and has manufacturing units at UAE and Oman. It is also the number 2 biscuit player in
UAE [3] with a strong contention to leadership and has a similarly strong market position in the
other GCC countries. Recently, the company has also started a greenfield manufacturing plant in
Nepal.

Capex

Britannia Industries is building its mega project in Ranjangaon, Maharashtra to increase the
capacity of all categories ranging from Biscuits, Cake, rusk, croissant & Diary plant. The company
invested 700 Cr so far and it plans to add another 800 Cr strategically. The company will receive
110% incentive from the Maharashtra government after the completion of the project.

80:20 Growth Strategy

The company performed well during the covid crisis by following the 80:20 rule, that is the
company focused on 20% of the brands like Marie Gold, Good Day, Milk Bikis & Nutri Choice,
which contributes 80% of the company’s revenue, were put on priority list which enabled the
company to streamline its productivity and increase the efficiency of the production.

Share Holding Pattern

Fig. 9

The Shareholding Pattern shows the investment of promoters, FII, DII, government, Retail
Investors.
Balance Sheet

Fig. 10

The above given Balance sheet shows us all the figures of Current assets, current liabilities, Total
assets, Total Equity, Shareholders funds and many things related to Britannia Industries Ltd.
Profit and Loss

Fig. 11

The above given Profit and loss statement shows us the last 3 years Sales, expenses, profit before
Tax, Net profit of Britannia Industries ltd.

As we can see the profit of the company is increasing year on year. So it is one of the positive side
Of the company that they are in a growing stage.

Ratios

Earning Per share (EPS)

(Figures are in Crores)

The Calculation of EPS is based on the Data Given in the Balance sheet of last 3 Financial Years.

EPS = NET INCOME/ NO. OF SHARES

 Year Net Income No. Of Shares EPS

2020-21 1851 24.09 76.83

2021-22 1516 24.09 62.93

2022-23 2316 24.09 96.13

Table 13

The Eps of the company is increasing year on year which is good for investment.

PE Ratio

The Calculation of PE Ratio is based on the Data collected from the Market and above EPS

Calculation.

PE RATIO= SHARE PRICE/EPS

Year Share Price EPS PE

2020-21 3895 76.83 50.69

2021-22 3450 62.93 54.82

2022-23 4106 96.13 42.71

Table 14

The PE Ratio is also in good range as per the price fluctuations.

Current Ratio

The current ratio measures how a business’s current assets, such as cash, cash equivalents,
Accounts receivable, and inventories, are used to settle current liabilities such as accounts
Payable.

Current Ratio = Current Assets/ Current Liability

Year Current Assets Current Liabilities CR

2020-21 4014 3327 1.20

2021-21 3593 3849 0.93

2022-23 4420 3845 1.14

Table 15

There is good balance of Assets and the Liabilities.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage

Debt Ratio= Total Liabilities/Total Asset

Year Total Liabilities Total Assets DE

2020-21 3403 7416 0.45

2021-22 4599 7002 0.65

2022-23 5656 8638 0.65

Table 16

The company is managing their Debts well.

Debt to Equity Ratio

The debt-to-equity ratio measures a company’s debt liability compared to shareholders’ equity.
This ratio is important for investors because debt obligations often have a higher priority if a
company goes bankrupt.

Debt to Equity Ratio= Total Debts/ Shareholders funds

Year Total Liabilities Shareholders Funds DE

2020-21 3403 3319 1.02

2021-22 4599 2402 1.91

2022-23 5656 3181 1.77

Table 17

The Debt to Equity is almost constant for last 3 FY.

Return on Equity Ratio

Return on equity (ROE) is the measure of a company’s net income divided by its shareholders’
Equity. ROE is a gauge of a corporation’s profitability and how efficiently it generates those
Profits.

ROE Ratio = Net Income/Shareholders funds

Year Net Income Shareholders Funds ROE

2020-21 1851 3319 0.55

2021-22 1516 2402 0.63

2022-23 2316 3181 0.72

Table 18

The ROE is also in good range from investors perspective.

Beta and Standard Deviation

The Calculation of Beta and the SD is totally based upon the last 3 years Market prices of
Britannia Industries Ltd. And the Nifty market returns.

Fig. 12

As per the calculation of Beta and SD, the volatility and the risk pattern are good, so here we can

Say the company is good for investment.

SWOT Analysis

Strengths

• Forte in Distribution Channel

• Creation of New Category
• Manufacturing and Cost power
• 80:20 Growth Strategy

Weaknesses

• Too much Reliance on Biscuit Business

• Dependency on Indian Market
• Intense Competition
• Giving Up on Consumer Surplus

Opportunity

• Demand for Low Calorie Products

• Overseas Markets
• Use of Social Media Marketing
• Dairy Business

Threats

• Rising Inflation
• Local Bakery Products
• Fake Products
• Desire for Healthy Biscuits
Future Growth Plans

Britannia’s focus would be to grow top line aggressively as input prices have stabilised, Berry
said, adding that the aim in the future would be to grow adjacent businesses (such as cheese) into
stronger segments. For instance, the aspiration for cheese was to make it a Rs 1,000 crores business
in five years.
TATA CONSUMER PRODUCTS LTD.

Tata Consumer Products Ltd. Is one of the leading companies of the Tata Group, with presence in
the food and beverages business in India and internationally. It is the second largest tea company
globally and has significant market presence and leadership in many markets. In addition to South
Asia (mainly India), it has presence in various other geographies including Canada, UK, North
America, Australia, Europe, Middle East and Africa.

Tata Salt: Largest salt brand in India

Tata Tea : 2nd Largest tea brand in India

Tetley : 3rd largest tea brand in the UK & largest tea brand in Canada

Himalayan: #1 natural mineral water brand in India

Eight o Clock : 4th largest R&G coffee brand in the USA

Tata Sampann : National brand in pulses, spices, dry fruits, and other staples.

It is among the top 10 FMCG companies in India

In Q2FY24, the market share in tea and salt decreased slightly.

S&D

Tata has a total reach of 3.8m outlets as of Sep’23, almost doubling its total reach since Sep’20.
Rurban focus – Added ~1,000 new distributors in FY24. All 50k+ population towns now have a
direct distributor.

Branded Vs Non-Branded

90% of total revenues come from the branded food & beverages business & the rest 10% comes
from the non-branded business of the company.

Revenue Mix H1FY24

• India Beverages: 37%

• India Foods: 28%
• US Coffee: 10%
• International Tea: 15%
• Tata Coffee (incl. Vietnam): 10%

Geographical Revenue Bifurcation

• India: 76%
• International: 24%

Tata Starbucks

It is a joint venture between Tata Consumer Products and Starbucks Corporation of America
wherein the company is working towards expanding the presence of Starbucks retail coffee stores
in the subcontinent of India. As of H1FY24, It has 370 stores (22 opened in Q2FY24) in 49 cities.

Tata Coffee (inc Vietnam ex EOC)

It is a subsidiary of the company with ~58% equity stake in it. The process of obtaining regulatory
approvals for the scheme of Arrangement between TCPL and Tata Coffee is underway. The matter
is currently in the final stages of the process with the NCLTs. The company announced the
expansion of an additional 5500 MT Freeze-Dried Coffee facility in Vietnam.
NourishCo

It’s a WOS of the company which sells saffron and other energy drinks. Co. launched the Tata
Gluco+ Sports Drink in India, in partnership with Football World Champions, Argentina.

Amalgamation

The company is amalgamating its wholly-owned subsidiaries viz. NourishCo Beverages Ltd., Tata
Consumer Soulfull Pvt. Ltd., and Tata SmartFoodz Ltd. Are the parent entities. This is expected
to result in synergies and savings.

Also, on Dec,23, NCLT approved the amalgamation of Tata Consumer Products Limited, Tata
Coffee Limited, and TCPL Beverages & Foods Limited.

Share Holding Pattern

Fig. 13

The Shareholding Pattern shows the investment of promoters, FII, DII, government, Retail
Investors.
Balance Sheet

Fig. 14

The above given Balance sheet shows us all the figures of Current assets, current liabilities, Total
assets, Total Equity, Shareholders funds and many things related to Tata Consumer Products Ltd.
Profit and Loss

Fig. 15

The above given Profit and loss statement shows us the last 3 years Sales, expenses, profit before
Tax, Net profit of Tata Consumer Products Ltd.

As we can see the profit of the company is increasing year on year. So it is one of the positive side
Of the company that they are in a growing stage.
Ratios

Earning Per share (EPS)

(Figures are in Crores)

The Calculation of EPS is based on the Data Given in the Balance sheet of last 3 Financial Years.

EPS = NET INCOME/ NO. OF SHARES

Year Net Income No. Of Shares EPS

2020-21 930 92.16 10.09

2021-22 1015 92.16 11.01

2022-23 1320 92.90 14.20

Table 19

The EPS of the company is not that high, but good as per the share price.

PE Ratio

The Calculation of PE Ratio is based on the Data collected from the Market and above EPS

Calculation.

PE RATIO= SHARE PRICE/EPS

Year Share Price EPS PE

2020-21 818.75 10.09 81.14

2021-22 761.40 11.01 69.15

2022-23 779.00 14.20 54.85

Table 20

The PE ratio is in decreasing range.

Current Ratio

The current ratio measures how a business’s current assets, such as cash, cash equivalents,
Accounts receivable, and inventories, are used to settle current liabilities such as accounts Payable.

Current Ratio = Current Assets/ Current Liability

Year Current Assets Current Liabilities CR

2020-21 3855 1400 2.75

2021-22 3927 1535 2.55

2022-23 4489 1848 2.42

Table 21

The Current ratio is almost constant for last 3 FY.

Debt Ratio

A financial ratio that measures the extent of a company’s leverage

Debt Ratio= Total Liabilities/Total Asset

Year Total Debts Total Assets DR

2020-21 2207 13431 0.16

2021-22 2463 14226 0.17

2022-23 2839 15592 0.18

Table 22

The number of Assets is in good number compared to Debts.

Debt to Equity Ratio

The debt-to-equity ratio measures a company’s debt liability compared to shareholders’ equity.
This ratio is important for investors because debt obligations often have a higher priority if a
company goes bankrupt.

Debt to Equity Ratio= Total Debts/ Shareholders funds

Year Total Debts Shareholders Funds DE

2020-21 2207 11224 0.19

2021-22 2463 11761 0.20

2022-23 2839 12753 0.22

Table 23

The Debt to Equity ratio is in a good range.

Return on Equity Ratio

Return on equity (ROE) is the measure of a company’s net income divided by its shareholders’
Equity. ROE is a gauge of a corporation’s profitability and how efficiently it generates those
Profits.

ROE Ratio = Net Income/Shareholders funds

Year Net Income Shareholders Funds ROE

2020-21 930 11224 0.08

2021-22 1015 11761 0.08

2022-23 1320 12753 0.10

Table 24

The ROE is also constant for last 3 FY which is good from investors perspective.
Beta and Standard Deviation

The Calculation of Beta and the SD is totally based upon the last 3 years Market prices of Tata
Consumer Products Ltd. And the Nifty market returns.

Fig. 16

As per the calculation of Beta and SD, the volatility and the risk pattern are good, so here we can
Say the company is good for investment for Risk taking investors.
SWOT Analysis

Strengths

• Diversity in Product Portfolio

• Strong Global Presence and Consumer Base
• Trusted Brand among Consumers
• Leading Packaged Tea Brand in India

Weaknesses

• Lesser Return on Capital Employed as Compared to Competitors

• Low profit margin due to Fluctuating input Prices

Opportunity

• Rise in rural disposable income shows room for Expansion and Growth
• Expansion in Flavours of Beverages
• Expansion in health and protein space
• Acquisition

Threats

• Changes in Consumer Preferences

• Exchange Rate and Interest Rate Fluctuations

Future Growth Plans

Tata Consumer Products Ltd (TCPL) is set to announce a ₹3,500 crores rights issue after seeking
board approval to fund its acquisitions of Capital Foods and Organic India pegged at ₹7,000 crores.
FINDINGS

As per the study and the analysis of The Indian Automobile Industry (4wheeler segment) here are
Some findings related to the analysis,

• The Balance Sheet helps to get to know about all the details related to the company. Such
• As, Total Asset, Total Liabilities, Current Assets, Current Liability, Shareholders funds
etc.
• Profit and Loss helps find the Net Income and Other things.
• With the help of ratios we can study the actual Fundamentals of the company.
• All the Balance sheet, profit and Loss are in a growing stage, the companies are generating
Good amount of Profits and capturing more assets.
• The Fundamental Ratios are balanced.
• The debts of the companies are balanced compared to the assets and equities.
• The Risk and Return is good for all the companies compared with market.
• From all the Calculation of Ratios ITC, Nestle India Ltd., And Tata Consumer Products
Ltd have good amount of assets and equities.
• ITC Ltd and Tata Consumer Products Ltd. Have the lowest EPS (14) and Britannia
Industries Ltd. Have the highest EPS (96).
• All the companies have Debt Ratio constant for last 3 Financial Years.
• The companies have good future plans for their development and growth.
SUGGESTION

As per the study and the analysis of the Indian Automobile Sector (4wheeler segment) here are
Some suggestions,

• Investing in this sector can offer various benefits like stability, growth, and good returns.
• The investors can shift to Indian FMCG Industry, because the Fundamentals are strong
enough of the sector for Investment.
• The Future Growth Plans of the Companies are also in favour of the investors.
• So here we can say the investors should invest in Indian Automobile Industry for long term
Perspective.
• For Risk Averse investor, Nestle India Ltd. And Tata Consumer Products Ltd are good for
investment.
• For Risk taking investors, ITC Ltd. And Britannia Industries Ltd. Will be good for
investment.
• From an Investor's perspective, all the companies are good for long term investment and
wealth creation.
CONCLUSION

In conclusion, the Indian FMCG sector offers great investment potential. Check out the Best
FMCG Stocks to Invest in India listed here for stability and growth. Remember, understand The
market cycles, assess cash reserves, and stay informed on emerging trends like New Products and
New developments. Study all the fundamentals, such as Balance sheet of the company, Profit and
loss, Ratios Related to the company, Future Growth Plans, Shareholding Patterns for the long-term
investment. Be disciplined in your approach, avoid blind tips, and adjust your portfolio wisely.
While these Stocks show promise, do your research for informed decisions. In the dynamic auto
industry, Strategic and well-researched investments are the keys to success.
REFERENCE

Bibliography

• Article on Fundamental Analysis of FMCG Industry by Sahil Agarwal (Birla Management

College, Finance).
• Article on Analysis on Fundamental Analysis of 3 FMCG Companies, by Jafar Hira.

Webliography

• https://www.mordorintelligence.com/industry-reports/india-quick-service-restaurant-
market
• https://www.screener.in/
• https://www.moneycontrol.com/promo/mc_interstitial_dfp.php?size=1280x540
• https://www.ibef.org/industry/fmcg
• https://www.researchgate.net/