This document provides an analysis of the top 4 FMCG companies in India. It includes a fundamental analysis comparing financial ratios of ITC, HUL, Godrej from 2010-2014. The analysis finds ITC has shown the most upward trend in share price over this period. An investor looking for long term returns would benefit most from investing in ITC based on this fundamental analysis. Technical analysis of share price trends was also conducted but results are not described. The document provides background on each company and extracts of financial statements including balance sheets and income statements for ITC and HUL.
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Fundamental analysis and technical analysis of Top 4 FMCG Companies
1. Project on
Fundamental and Technical analysis of Top 4 FMCG Companies
SYMBIOSIS INSTITUTE OF BUSINESS
MANAGEMENT-Hyderabad
Submitted to
Dr. Rishi Shukla
Shreya Banerjee
Shahid Hassan
2. Abstract:
This analysis was done to study the trend in the shares of the Top FMCG
companies. The parameters used to study the trends are Fundamental Analysis
and Technical Analysis. Fundamental analysis contains Ratio’s which are used
to study Growth% ,Gross Profit Margin, Return on equity, earning per share,
price to book ratio, price to sales etc of the companies. In Technical Analysis
we studied the opening price and closing price of the shares, and the trends of
these companies, where it can help us to understand in which company we need
to invest. At last we have seen that ITC has the most upward trend in its share
price and if any investor wants to invest in this company he will get the long
term benefit.
1. Introduction
Fast Moving consumer goods(FMCG) is a sector in which the products can be sold
quickly and at relatively low cost which includes not durable goods like soft drinks,
toys, drugs and many other consumables. The FMCG term was given by MR. Neil
H.Borden in the concept of marketing mix in the year 1965. FMCG has a shorter shelf
life which leads to high consumer demand because the product deteriorates rapidly.
The profit margin made by FMCG products is relatively small so they are generally
sold in large quantities to the producers or suppliers. The cumulative profits on these
products can be substantial.So the FMCG sector is probably the most unique case of
low margin and high volume business.The Top FMCG companies are
HUL,ITC,GODREJ etc..
Hindustan Unilever Limited is a public limited company which was founded in 1932.
The key people of HUL are Harish Manwani(Chairman) and Sanjiv Mehta(CEO &
MD). The products sold by the company are foods,beverages, cleaning agents and
personal care products. The headquarter is located at Mumbai, Maharashtra, India.The
Parent company of HUL is Unilever Plc(67%).The Revenue generated by the
company in the year 2011-12 is Rs 221billion and it is listed in BSE Sensex.
ITC Limited is an Indian Conglomerate company which was founded in 1910.The key
people is Y.C.Deveshwar(chairman). The products sold by the company are Tobacco
hotels, paperboards & speciality papers, packaging,agri-business, packaged foods &
confectionery.The headquarter located in Kolkata, West Bengal.The revenue
generated by the company in the 2013-14 is Rs13,051.89crores.It is listed in BSE
Sensex and NSE .
3. Godrej is known as Godrej Consumer Products Limited. It is an Indian consumer
goods company. It was founded in the year 2001. The key people are Adi Godrej,
Chairman,Vivek Gambhir, Managing Director .The products sold by the company are
Toilet soaps, hair colour, household insecticides, liquiddetergents, toiletries, Air
Fresheners etc..The headquarters is located at Mumbai, Maharashtra ,India. The
revenue generated by the company in the year 2010-11 was Rs 37.93 billion.It is listed
in NSE Sensex and BSE Sensex both.
Colgate Palmolive Company is an American multinational consumer products
company. It was founded in the year 1806.The key people is Ian M.Cook,CEO.The
products sold by the company are soaps, detergents and oral hygiene
products(including toothpaste and toothbrush).The headquater is located in park
avenue in New York city, New York, United States.The revenue generated by the
company in the year 2013is US $ 17.42 billion . It is a listed in NYSE.
2. Research Design& Methodology
This research has been carried purely on the basis of secondary data. The subject
matter of this study is to pertain to the financial and technical analysis of the 3 FMCG
companies over the years(2014- 2010).To study the Growth and Investment
perspective, to understand and to conclude with conviction, the present secondary
data is been taken from Live Mint and Money Control .
3. Fundamental Analysis
Fundamental analysis is the cornerstone fora company in which investment is to be
done by an investor.This Fundamental Analysis helps an individual to understand
whatis the present situation of the company to those who cannot understand the
balance sheet and profit and loss statements. The biggest part of fundamental analysis
involves in studying the financial statements also known as quantitative analysis,
which involves looking at revenues ,expenses ,assets, liabilities and all other financial
aspects of the company. For knowing the company’s future performance,
Fundamental analysts look at this information and gives his/her opinion.
4. Fundamental Ratio’s:-
The Ratios are very much necessary in order to analysis the investment scenarios.
Fundamental Ratio is comparing the number against previous years, with others
companies, the industry or even the economy in general.
Let us see the Fundamental Analysis and Fundamental Ratio’s by looking in to the
balance sheet and profit and loss statements of ITC, HUL,Godrej Companies.
20. Concepts and Analysis
1. Earnings
The key element all investors look after is earnings. Before investing in a company
you want to know how much the company is making in profits. Future earnings are a
key factor as the future prospects of the company's business and potential growth
opportunities are determinants of the stock price.
From the Earnings per share graph we can say that EPS is good in case of Colgate,
when compared with other 3 companies.
2. Profit Margins
Amount of earnings do not tell the full story, increasing earnings are good but if the
cost increases more than revenues then the profit margin is not improving. The profit
margin measures how much the company keeps in earnings out of every Rupee of
their revenues. This measure is therefore very useful for comparing similar
companies, within the same industry.Higher profit margin indicates that the company
has better control over its costs than its competitors.
From the Net profit Margin graph, we can say that Net Profit Margin is good in case
of ITC Company.
3. Return on Equity (ROE)
Return of equity (ROE) is a financial ratio that does not account for the stock price.
Since it ignores the price entirely it is by many thought of as THE most important
financial measure. It can basically be thought of as the parent ratio that always needs
to be considered.
3% 3%
3% 4%
4%
3%
4%
3%
4%
4%
2% 2%
4% 4%
3%3% 3% 3%
4%
5%
0%
1%
2%
3%
4%
5%
FY2014 FY2013 FY2012 FY2011 FY2010
Earning Yeild
ITC HINDUSTAN UNILIVER
GODREJ CONSUMER CARE Pvt Ltd. COLGATE
21. This ratio is a measure of how efficient a company is in generating its profits.
From the Return on Equity graph, we can say that Return on Equity is good in
case of ITC .
4. Price-to-Earnings (P/E)
A high P/E indicates that the stock is priced relatively high to its earnings, and
companies with higher P/E therefore seem more expensive..
This ratio does not tell the full story since it does not account for growth. Normally,
companies with high earnings growth are traded at higher P/E values than companies
with more moderate growth rate. Accordingly, if the company is growing rapidly and
is expected to maintain its growth in the future this current market price might not
seem so expensive.
From the graph of P/E Godrej P/E ratio has increased so much whereas Colgate and
ITC has almost consistent trend.
5.Earnings Yield:
As per the graph the Earning yield is good in case ITC.
6. Price-to-Book(P/B)
A price-to-book (P/B) ratio is used to compare a stock's market value to its book
value. This ratio gives certain idea of whether you are paying too high price for the
stock as it denotes what would be the residual value if the company went bankrupt
today.According to the graph Hindustan Uniliver is good.
From all these above concepts ,Investor can choose ITC for the long term
benefits which wouldarrive in the near future.
4.Technical Analysis
Technical analysis studies supply and demand in a market in order to determine what
direction or trend will continue in the future, in other words ,technical analysis
attempts to understand the what emotions markets has?
The Secondary Data is taken from Bombay Stock Exchange.
Let us examine the Technical Analysis of ITC,HUL,Godrej and Colgate with the
use of Share Markets( from 1st April 2014 to 5th March 2015).
The Stock Market Data is Attached in the Annexure 1 .
With the help of these data we will study the technical analysis by analysing the
trend of the shares in the stock market.
26. Conclusion:
ITC:
1)The Volume is high and high price of the share is 399.55 on 25th Feb 2015,which is
the highest price among the others.
2)We can find a mostly a horizontal trend with a very slow upward trend.
3)The log return value chart it is varying majorly between 2% and -2%
4)From the Analysis ,we can say that , it is good to invest ,if we seek for long term
investment.
GCPL:
1)From the candle chart we can say that the Volume and high price of the share is
1203.75 on 5st March 2015,which is the highest price among the others.
2)We can find a slight upward trend with a horizontal trend till 21th Aug 2014
3) We can see horizontal trend and then slight upward trend from 21st Aug 2014 to
5th march 2015
4)The log return value chart it is majorly varying between 2% and -2%
5)From the Analysis ,we can say that , it is good to invest ,if we seek for long term
investment.
Colgate:
1)From the candle chart we can say that the Volume and high price of the share is
2068.65 on 5st March 2015,which is the highest price among the others.
2)We can find a slight upward trend with a horizontal trend till 24th July 2014
3) We can see slight downward trend and quickly a horizontal trend and then slight
upward trend from 24st July 2014 to 5th march 2015
4)The log return value chart it is majorly varying between 2% and -2%
5)From the Analysis ,we can say that , it is good to invest ,if we seek for long term
investment.
27. HUL:
1) From the candle chart we can say that the Volume and high price of the share is 939
on 5th March 2015,which is the highest price among the others.
2) We can see mostly a horizontal trend with a upward trend slightly till 6th jan 2015.
3)From 6th jan 2015 there is a upward trend and then it became horizontal trend.
4)From the Analysis ,we can say that , it is good to invest ,if we seek for long term
investment.7
Online International, Reviewed & Indexed Monthly Journal www.raijmr.com
9 Online International, Reviewed & Indexed Monthly Journal www.raijmr.com
Refrences:
http://www.itcportal.com/about-itc/profile/index.aspx
http://www.colgate.co.in/app/Colgate/IN/HomePage.cvsp
http://www.godrejcp.com/about-us.aspx
http://www.hul.co.in/aboutus/
http://www.moneycontrol.com/
http://www.bseindia.com/
http://www.livemint.com/