FMCG, short for Fast Moving Consumer Goods stocks, is the stock that yields high dividends. For those who don’t know about the FMCG sector. In general, it comprises those companies that manufacture goods that are consumed by human beings on a regular basis.
The FMCG stocks in India are thus known for their outstanding performance and with the rising population and urbanization of our states at a high rate, it can be easily said that the FMCG sector will keep rising in the market capitalization as new companies will also continue to enter into the market.
How The FMCG Sector Evolved?
The FMCG sector is indeed one of the largest sectors in the economy. The key contributing points towards this sector are Growing awareness, rising disposable income, increasing overall consumption (both in the urban and rural sector), changing lifestyles, growing rural economy, rising consumption expenditure
According to the Confederation of Indian Industry (CII), the FMCG sector of India is likely to grow at a Compound Annual Growth rate (CAGR) of 12-17% over the span of the next five years. Furthermore, the investors are going to benefit a lot with the help of the Goods and Service Tax (GST) as the taxation on the inter-state transaction has been sorted.
The much efficient supply chain and logistics management have led to an increase in the cost- efficiency of the companies that has resulted in a considerable increase in the profit margins.
People’s motive towards investments is to chase growth and get consistent returns thus making investments in the FMCG stocks an attractive option. For a start, one can check some of the renowned ones like ITC share price to get a hang of the FMCG market pricing.
Why Should You Invest In And Hold Stocks Of FMCG Companies?
Investing in FMCG stocks has a never-ending list of sustainable benefits that can prove to be a great tool to combat market fluctuations as well. There are several reasons to invest in these stocks and some of them are enlisted below:
Increase in competition FMCG sector has seen intense competition as many new companies have poured into the market with even better products. For instance, Patanjali has taken the whole market by storm after it came with the motive of making products that were supposed to be pure ayurvedic. People also welcomed all the products with all the interest.
To continue to be in the top, other renowned FMCG companies like Marico and ITC also came up with new products made with organic substances adding a lot more scope for the investors to keep an eye at the share price of these companies. For instance, an investor inclined towards FMCG sector stocks can check Marico share price latest news and forecast and compare with others.
This competition is never-ending and has increased the valuation of the FMCG sector as more and more products are being conceived and manufactured on a daily basis. Every other company is coming up something better and innovating to offer and in the process, has driven the stock prices up.
Increase In Demand
Surprisingly the reason why the FMCG sector is growing at a rate this fast is the revenue from rural India; 60% of the total growth of the FMCG sectors comes from the rural areas. As the government takes measures to manufacture more and more consumer goods for the people living in villages, the sector booms further.
As long as there is industrialization and the government continues to make policies to improve the lifestyle of people in rural areas, this sector will keep on growing in valuation, and the stock prices will also increase.
On the other hand, if you look at the growth curve of the FMCG sector, you can easily estimate that there will always be demand for consumer products no matter what. Holding the best FMCG stocks will let you earn a higher return over a period of time and to do that, the most important thing is to hold your stocks.
Growing Startup Culture And Innovation
The main upside for the investors to be positive about this sector is that it is now enhancing the steps with innovation which was not a common scenario earlier. Various Start-ups facilitating online services with door-to-door delivery have made the FMCG sector more advanced as people can do a lot more with just a click.
FMCG start-ups have realized that the conventional way of business and solely relying on investor funding is not enough for long-term success; they are leveraging the power of technology to solve the problem of market gaps.
Not only that, but the online business also facilitates better customer service which has now become areas of major focus for new FMCG industries. It has increased healthy competition, and the customers are provided low-cost quality products at ease. These start-ups enable investors with flexible options to exit and enter as other investors are always looking to buy shares of a good start-up having growth potential from the list of best FMCG stocks in India.
The rate of acquisition and mergers are also quite high with these new ventures, creating the scope for extraordinary returns.
If you hold a share of an FMCG company and are looking to sell, you should probably hold it off for some more years and should consider buying more FMCG shares, as this sector is expected to grow by leaps and bounds in the coming years.
On A Closing Note
Holistically, investing in the FMCG stocks is the most profitable option owing to the excellent track record, consistent growth, and great returns. Make sure to define a time frame for the stocks you invest in the FMCG sector. As per the experts, these stocks must always be entailed in your portfolio, keeping the long-term investment in mind.
