FMCG Sector Loses Its Excitement

Taking about the FMCG sector, in this article, Geyatee Deshpande discusses about how the FMCG sector, once the most preferred by investors, has recently lost its glow

- Geyatee Deshpande

As the pandemic hit economies, investors got worried about the disruptions caused in the FMCG sector leading to loss of business. But it was the FMCG sector that subsequently gained a lot of attention of investors as well. While FMCG stocks enjoyed a strong rally in the equity markets in the year 2020 post the pandemic, soon they lost their shine. Looking back, the decade of 2010 proved to be a cheerful decade for Indian consumer goods’ companies, seeing vast amounts of investments pouring in. One considered these to have low risks and reward handsome gains.

With India developing at a fast pace, companies belonging to the FMCG sector witnessed generous increase in revenues, strong cash flows, few corporate governance issues, higher demand for their products and ever-increasing market share. As a result, investors have always preferred to include FMCG companies in the portfolios. Some believed that investing and holding for a few years shares of a few FMCG companies with strong financials and growth outlook could reward great profits.

The above table highlights top performing FMCG companies in the last three years. Shares of Hindustan Foods gained around 96.79 per cent while that of Varun Beverages rose by 35.13 per cent in the last three years. Tata Consumer Products has jumped by around 31.22 per cent in three years. Tasty Bite Eatables has given positive returns of about 21.47 per cent to its shareholders.

FMCG Sector in the Limelight