Best stocks to invest in 2020 (FMCG & Retail)

Articles > Submitted by raja on 4/21/2020 | Views: 374

Based on strict parameters related with financial numbers, management and future potentials, below are some of the best stocks/shares to invest in 2020 in India. In this post, we have covered FMCG and Retail sector.

Table of Contents

    As mentioned in the previous article, below are my filter criteria to select companies in FMCG and Retail sector.

    These filters ensures that company have 

    1. No corporate governance issue
    2. High promoters holding
    3. Preferably foreign promoters holding or high % of FII holding
    4. Nil or very less debt
    5. Dividend paying company
    6. > 20% RoCE, the higher, the better
    7. No pledge of promoters shares
    8. Comparatively Less equity capital
    9. Low equity capital
    10. Consistent EPS growth
    11. Consistent cash flow
    12. Consistent tax payer

    Of course, long runway of growth are also important. However, if a company fits into above parameters, we can assume that promoters are dynamic and visionary enough to take care of remaining things. Below companies fits into my criteria for investment.

    FMCG Sector

    FMCG stands for fast moving consumer goods sector. FMCG goods include packaged food, toiletries, beverages, stationary, over-the-counter medicine, laundary products, plastic goods, personal care, home care etc.

    Procter & Gamble Hygiene & Health Care Ltd. (PGHH)

    PGHH caters to female and health care business under FMCG sector. It is one of the renowned company in India and holds many popular brands that are very familiar names in Indian household.

    It's brands includes Whisper, Vicks, Old Spice, Pampers, Ariel, Tide, Ambipur, head & shoulders, Pantene, Olay, Gillette, Oral-B etc.

    Price 10846 Face value 10
    Reputed Management and Adhering to good Corporate governance Yes, no CG issue found High promoter holding
    Foreign promoter?
    70.64%
    Yes
    P/E 83.10 Dividend yield 0.81%
    Pledged shares No Debt to Equity 0.00
    RoCE 72.38% PEG ratio 11.99
    Cash flow 132cr in 2008 to 412cr in 2019 Equity capital 32.46 cr.
    EPS growth Yes, from 37.09 in 2008 to 130.43 in 2019 Deferring taxes? No

    P&G is one of the most reliable company outside India and Indian subsidiaries holds most of the household names that touches our life almost every day.

    Its sale has grown @14% and stock price has compounded @18.24% in last 10 years.

    Britannia Industries Ltd.

    Britannia Industries caters to the food segment and manufacture biscuits, cakes and rusks etc. It holds brands like Good Day, 50-50, Nutri Choice, Crackers, Marie Gold, Tiger, Milk Bikis, Cake, Treat, Bourbon, Pure Magic, different types of breads, cheese, dairy products, cakes, Toastea etc.

    Price 2833 Face value 1
    Reputed Management and Adhering to good Corporate governance Yes, no major CG issue found High promoter holding
    Foreign promoter?
    50.63%
    Yes
    P/E 51 Dividend yield 0.53%
    Pledged shares No Debt to Equity 0.37
    RoCE 44.31% PEG ratio 2.07
    Cash flow 69cr in 2008 to 1156cr in 2019 Equity capital 24.03 cr
    EPS growth Yes, from 3.56 in 2008 to 55.14 in 2019 Deferring taxes? No

    It is one of the very good compounder of Indian market and a trustworthy brand of India that is a household name in India.

    Its sale has grown @12% and stock price has compounded @23% in last 10 years.

    Nestle India Ltd

    Nestle India Ltd. caters to mainly food segments. It's popular brands includes Nescafe, Maggi, Milkybar, Kit Kat, Milkmaid, Nestea, Koko Krunch, Munch, Every Day, Nourish, Ceregrow, Nangrow etc. It's foreign holding companies includes Nestle S.A and Maggi Enterprises Ltd.

    Price 16976 Face value 10
    Reputed Management and Adhering to good Corporate governance Yes, no CG issue found High promoter holding
    Foreign promoter?
    62.76%
    Yes
    P/E 83.10 Dividend yield 0.95%
    Pledged shares No Debt to Equity 0.03
    RoCE 70.93% PEG ratio 10.76
    Cash flow 519cr in 2007 to 2052cr in 2018 Equity capital 96.42 cr.
    EPS growth Yes, from 37.50 in 2007 to 204.28 in 2019 Deferring taxes? No

    Though based on the number, Nestle looks expensive however it is always like this because of its product range, proven management. The stock price has compounded @20% for last 10 years. 

    Its sale has grown @10% and stock price has compounded @20% in last 10 years.

    Hindustan Uniliver Ltd. (HUL)

    It is India's largest and one of the oldest FMCG company. It's vast range of products are used in almost all household of India. It's popular brands includ Boost, Comfort, Dove, Horlicks, Cornetto, Lifebuoy, Lipton, Lux, Pepsodent, Ponds, Sunsilk, Vaseline, Wheel, Bru, Closeup, Domex, Fair & Lovely, Lakme, Pears, Rin, Surf excel, Toni & Guy, Vim, Annapurna, Red Label, Taaza, Taj Mahal, Clinic Plus, Hamam, Kissan, Kwality Wall's, Ayush, Liril, Rexona, Sunlight etc.

    Price 2337 Face value 1
    Reputed Management and Adhering to good Corporate governance Yes, no CG issue found High promoter holding
    Foreign promoter?
    67.18%
    Yes
    P/E 72.75 Dividend yield 0.94%
    Pledged shares No Debt to Equity 0.01
    RoCE 116% PEG ratio 6.30
    Cash flow 1732cr in 2007 to 5800cr in 2018 Equity capital 216 cr.
    EPS growth Yes, from 7.16 in 2007 to 31.44 in 2019 Deferring taxes? No

    HUL produces products that are always in demand whether it is recession or not; as it is of day to day use. This is a solid company and has penetrated its products in almost every household and caters to all level of people, right from low, meddle to high class.

    Its sale has grown @6.75% and stock price has compounded @25.60% in last 10 years.

    Retail sector

    Retail sector though has large impact because of Covid-19 issue, however it will be very fast to recover as the demand has just been delayed because of lockdown. Once things will be back to normal, flocks of people will be heading to these shops. Companies includes in this sector are retailers like DMart, Bata, Shoppers Stop etc.

    Relaxo Footwears Ltd.

    Relaxo is market leader in Indian footwear Industry. It has one of the biggest footwear manufacturing facility in India and its brands includes Flite, Sparx, Bahamas, Schoolmate etc.

    Price 607 Face value 1
    Reputed Management and Adhering to good Corporate governance Yes, no CG issue found High promoter holding
    Foreign promoter?
    70.98%
    No
    P/E 65.91 Dividend yield 0.21%
    Pledged shares No Debt to Equity 0.19
    RoCE 25.69% PEG ratio 3.08
    Cash flow 31cr in 2008 to 123cr in 2019 Equity capital 12.4 cr.
    EPS growth Yes, from 0.43 in 2008 to 9.23 in 2019 Deferring taxes? No

    Its sales has grown @18% and stock price has compounded @44% in last 10 years.

    Bata India Ltd.

    Bata is one of the household name in India in footwear category. It is the largest retailer and leading manufacturer of footwear. It holds many brands like Bata, Ambassador, Hush Puppies, Scholl, Comfit, Marie Claire, Power, Naturalizer etc.

    Price 1208 Face value 5
    Reputed Management and Adhering to good Corporate governance Yes, no CG issue found High promoter holding
    Foreign promoter?
    52.96%
    Yes
    P/E 40.93 Dividend yield 0.52%
    Pledged shares No Debt to Equity 0.13
    RoCE 30.72% PEG ratio 3.84
    Cash flow 62cr in 2007 to 345cr in 2019 Equity capital 64.26 cr.
    EPS growth Yes, from 2.99 in 2007 to 29.51 in 2019 Deferring taxes? No

    Its sales growth is @11% and stock price has compounded @25% in last 10 years.

    Avenues Supermarts Ltd.

    This is well known company that operates D-Mart super market in India. It is one of the best and cheapest super market in India where flocks of people go everyday to buy their day to day consumable items.

    Price 2256 Face value 10
    Reputed Management and Adhering to good Corporate governance Yes, no CG issue found High promoter holding
    Foreign promoter?
    75% (appox.)
    No
    P/E 119.66 Dividend yield 0.0%
    Pledged shares No Debt to Equity 0.13
    RoCE 25.57% PEG ratio 2.92
    Cash flow 65cr in 2012 to 807cr in 2019 Equity capital 624.08 cr.
    EPS growth Yes, from 1.13 in 2012 to 19.56 in 2019 Deferring taxes? No

    Its sale has grown @33% and stock price has compounded @44.80% in last 3 years.

    Disclaimer: Numbers are as it is taken from screener.in. One can assume human error while typing. These information has been provided for information only. It should not be treated as recommendations. These companies pass my filter criteria explained above so I like these companies and may invest in future.

    Website disclaimer: The views, opinions, investment advices (if any) expressed by author on Sharefunda.com are their own and not that of the website or its management. Users are advised to contact certified financial advisor before making investment decisions.

    Submitted by raja on Tuesday, April 21, 2020

    Wait for opportunity and grab with all hands like Eagle.

    Response


    Intresting...
    Posted by Som
    on 4/22/2020 4:54:22 PM

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