Best FMCG Stocks – HUL Vs ITC Stocks

Company Overview of Hindustan Unilever Ltd

Hindustan Unilever Limited, an Indian consumer goods company, operates across five key segments: Beauty & Wellbeing, Personal Care, Home Care, Nutrition and Ice Cream. Within the Beauty & Wellbeing segment, the company focuses on selling hair care and skin care, including Prestige Beauty and Health & Wellbeing products. 

The Personal Care segment covers skin cleansing, deodorant and oral care products. Home Care involves fabric care and a variety of cleaning products. In the Nutrition segment, the company offers scratch cooking aids, dressings and tea products. The Ice Cream segment focuses on selling ice cream products.  

Company Overview of International Trade Centre (ITC)

ITC Limited, a holding company based in India, operates through several segments. These segments include Fast Moving Consumer Goods (FMCG), Hotels, Paperboards, Paper and Packaging and Agri-Business. 

In the FMCG segment, the company offers a variety of products such as cigarettes, cigars, personal care items, safety matches and packaged foods like staples, snacks, dairy products and beverages. The Agri-Business segment deals with agricultural commodities like wheat, rice, spices, coffee, soya and leaf tobacco.  

Stock performance of HUL

The table below shows the stock performance of Hindustan Unilever Ltd over the past 1 year.

Stock performance of ITC

The table below shows the stock performance of ITC over the past 1 year.

Fundamental Analysis of HUL Ltd

Hindustan Unilever Limited (HINDUNILVR) is a leading consumer goods company in India, renowned for its wide range of products including personal care, home care and food items. A subsidiary of the multinational Unilever, it was established in 1933 and has since become a household name.  

The stock is priced at ₹2382.80 with a market cap of ₹5.75L Crores and a dividend yield of 1.72%. It has a 1Y return of -5.52%, a 5Y CAGR of 3.27% and a 5Y average net profit margin of 16.62%, reflecting moderate growth and profitability.

• Close Price ( ₹ ): 2382.80
• Market Cap ( Cr ): 574533.80
• Dividend Yield %: 1.72
• Book Value (₹): 51423.00 
• 1Y Return %: -5.52
• 6M Return %: 0.67
• 1M Return %: -11.60
• 5Y CAGR %: 3.27
• % Away From 52W High: 27.37
• 5Y Avg Net Profit Margin %: 16.62

Fundamental Analysis of ITC Ltd

ITC Limited is a prominent Indian company with a diversified portfolio spanning various sectors, including Fast-Moving Consumer Goods (FMCG), hotels, packaging, paperboards and agribusiness.  

The stock is priced at ₹474.65 with a market cap of ₹5.94L Crores and a dividend yield of 2.89%. It has a 1Y return of 3.97%, a 5Y CAGR of 13.90% and a 5Y average net profit margin of 26.64%, indicating strong profitability and growth potential.

• Close Price ( ₹ ): 474.65
• Market Cap ( Cr ): 593825.68
• Dividend Yield %: 2.89
• Book Value (₹): 74889.97 
• 1Y Return %: 3.97
• 6M Return %: 7.90
• 1M Return %: -5.61
• 5Y CAGR %: 13.90
• % Away From 52W High: 11.35
• 5Y Avg Net Profit Margin %: 26.64

Financial Comparison of HUL and ITC

The table below shows a financial comparison of HINDUNILVR and ITC.

Dividend of HUL and ITC

The table below shows a dividend paid by the company.

Advantages and Disadvantages of Investing HUL

Hindustan Unilever Ltd

The primary advantage of Hindustan Unilever Ltd (HUL) lies in its strong brand portfolio, market leadership and extensive distribution network. As one of India’s largest consumer goods companies, HUL benefits from wide consumer reach and a diversified product range across various categories.

1. Brand Power: HUL owns some of the most trusted and popular brands in India, such as Dove, Surf Excel and Lipton. This brand recognition enables it to command a loyal customer base and maintain market dominance.
2. Market Leadership: As a leader in the fast-moving consumer goods (FMCG) sector, HUL enjoys strong growth prospects across multiple product categories, from home care to beauty and wellness, benefiting from the Indian economy’s growing middle class.
3. Robust Distribution Network: HUL has a vast distribution network, covering urban and rural areas across India. This extensive reach ensures that its products are accessible to millions, giving it an edge over competitors in market penetration.
4. Focus on Innovation: HUL consistently focuses on innovation, introducing new products and improving existing ones. Its commitment to R&D enables the company to respond to changing consumer preferences and stay ahead in a competitive market.
5. Sustainability Initiatives: HUL is committed to sustainability through its various environmental and social responsibility programs. Its focus on reducing carbon emissions, water usage and waste, along with sustainable sourcing, enhances its reputation and long-term viability.

The main risk for Hindustan Unilever Ltd (HUL) lies in its exposure to volatile raw material costs and changing consumer preferences. Economic disruptions, such as inflation, can impact margins, while evolving consumer trends may challenge HUL’s product offerings and market position.

1. Raw Material Price Fluctuations: HUL relies on raw materials like palm oil, packaging and chemicals. Price hikes in these inputs due to supply chain disruptions or inflation could negatively impact profitability and force the company to pass on costs to consumers.
2. Competition: The FMCG sector is highly competitive, with both domestic players and global brands like Procter & Gamble and Nestlé. Intense competition in categories like personal care and food can pressure HUL’s market share and profit margins.
3. Regulatory Challenges: As a large FMCG player, HUL faces regulatory scrutiny from the Indian government, especially regarding environmental standards, packaging norms and health regulations. Changes in government policies could affect product formulations or packaging, leading to increased compliance costs.
4. Consumer Behavior Shifts: Shifting consumer preferences, driven by health trends or environmental concerns, may challenge HUL’s traditional product offerings. If HUL fails to adapt to these trends, it could lose its competitive edge in certain categories.
5. Sustainability Risks: While HUL is focused on sustainability, there are risks related to sourcing sustainable ingredients, managing waste and reducing its environmental footprint. Failure to meet sustainability targets could impact its reputation, consumer trust and long-term growth prospects.

Advantages and Disadvantages of Investing ITC

ITC Ltd

The primary advantage of ITC Ltd lies in its diversified business model, which includes FMCG, hotels, paperboards and agri-business. This broad portfolio not only mitigates risks but also ensures steady growth from various revenue streams, making ITC a resilient player in the market.

1. FMCG Leadership: ITC has established strong leadership in FMCG sectors, particularly in food, personal care and home products. Its brands like Aashirvaad, Sunfeast and Classmate cater to a wide range of consumers, ensuring consistent revenue growth.
2. Tobacco Dominance: Despite regulatory challenges, ITC remains a leader in the Indian tobacco industry. Its stronghold in this segment provides significant revenue, with steady cash flows that support investments in other growth areas, such as FMCG and hotels.
3. Diversification into Hotels and Paper: ITC’s presence in the hospitality and paperboard sectors adds stability. Its hotel brands like ITC Maurya cater to the premium market, while its paperboards and packaging segment offers growth opportunities in sustainable products.
4. Sustainability Initiatives: ITC is committed to sustainability, with initiatives aimed at reducing carbon emissions, improving water efficiency and promoting green packaging. Its focus on environmental responsibility enhances its brand value and appeals to socially conscious consumers.
5. Strong Financials and Cash Flow: ITC’s robust financial position, backed by strong cash flow from its tobacco and FMCG businesses, enables continued investment in new products, expansion and shareholder returns. This financial strength supports its long-term growth strategy.

The main risk for ITC Ltd stems from its reliance on the tobacco business, which faces increasing regulatory scrutiny and changing public perceptions. This exposure may limit the company’s long-term growth potential, especially if tobacco regulations tighten further.

1. Regulatory Risks in Tobacco: ITC derives a significant portion of its revenue from tobacco. Increased government regulations, higher taxes, or stricter advertising restrictions could impact the profitability of its tobacco products and force it to adapt its strategy.
2. Competition in FMCG: The FMCG market, particularly food and personal care, is highly competitive. ITC faces intense competition from established players like Hindustan Unilever and Nestlé. If it fails to innovate or strengthen its brand portfolio, its market share could decline.
3. Commodity Price Volatility: ITC’s FMCG business is impacted by fluctuating raw material costs, such as agricultural produce and packaging materials. A rise in commodity prices could squeeze margins, especially in price-sensitive categories like food products.
4. Economic Slowdowns: A slowdown in India’s economy, particularly in rural areas, could hurt consumer spending on discretionary items, affecting ITC’s FMCG and lifestyle products. While tobacco sales remain steady, FMCG growth may be more vulnerable in tough economic times.
5. Sustainability Challenges: As ITC increasingly focuses on sustainability, it faces challenges related to sourcing eco-friendly materials, reducing emissions and managing waste. Failure to meet environmental goals could hurt its reputation and consumer loyalty, particularly among environmentally-conscious buyers.

How do you invest in HUL Ltd and  ITC Ltd stocks?

To invest in Hindustan Unilever Limited (HUL) and ITC Limited stocks, you need a demat and trading account to hold and trade shares electronically. Brokers like Alice Blue offer such accounts with competitive brokerage fees.

1. Conduct Thorough Research on HUL and ITC: Analyze the financial health, market position and growth prospects of HUL and ITC. Review their annual reports, recent news and industry trends to make informed investment decisions.
2. Choose a Reputable Stockbroker: Select a reliable stockbroker, such as Alice Blue, to open your demat and trading accounts. Consider factors like brokerage charges, customer service and trading platform features.
3. Fund Your Trading Account: Deposit sufficient funds into your trading account to cover the purchase of HUL and ITC shares, including any associated fees. Ensure you have a clear budget and investment plan.
4. Place Your Buy Orders: Use your broker’s trading platform to search for HUL and ITC stocks by their ticker symbols. Decide on the number of shares and set your order type—market or limit—based on your investment strategy.
5. Monitor Your Investments Regularly: Keep track of your investments by following market trends, company performance and industry developments. Regular monitoring helps you make timely decisions to hold, buy more, or sell your shares.

HUL Ltd vs. ITC Ltd – Conclusion

HUL Ltd is a dominant player in the FMCG sector, known for its strong brand portfolio, market leadership and consistent growth. With a focus on innovation and sustainability, HUL offers long-term stability and profitability, making it an attractive investment option for growth-focused investors.

ITC Ltd stands out with its diversified business model, spanning FMCG, tobacco, hotels and paperboards. While its tobacco business provides steady cash flow, ITC’s growth in the FMCG and hospitality sectors is increasingly important. Its strong financials make it a compelling choice for investors seeking both stability and diversification.

Best FMCG Stocks – HUL vs. ITC – FAQ

Disclaimer: The above article is written for educational purposes and the companies’ data mentioned in the article may change with respect to time. The securities quoted are exemplary and are not recommendatory.