Defensive FMCG stocks are shares of companies that produce essential goods like food, beverages, and personal care items, remaining stable even during economic downturns due to consistent demand. The FMCG sector is the fourth-largest in the Indian economy, with household and personal care products accounting for 50 percent of the market share as the dominant segment.
Nifty FMCG has fallen nearly 16 percent over the last quarter. This was mainly due to a slump in demand and inflationary pressure. In spite of such a nosedive, certain stocks in the sector stand out as attractive investment options.
ITC Ltd
Indian Tobacco Company Limited is diversified into multiple business areas, including tobacco manufacturing, food processing and retailing. ITC has a 5-year CAGR of 9.03 percent in revenue and 10.08 percent in net profit, along with a standout dividend yield of 3.17 percent, the highest among its peers.
ShareKhan has set a target of Rs 595 for ITC, offering a 35 percent upside from its current price of Rs 440.20. This rating is based on the value expected to be unlocked through the hotel business demerger, which took place on January 6, 2025. ITC retains 40%, while 60% is distributed to shareholders.
Varun Beverages Ltd
Varun Beverages Ltd manufactures and sells carbonated soft drinks and non-carbonated beverages, including packaged water, under PepsiCo trademarks. They have reported a 5-year CAGR of 25.57 percent and 47.62 percent in net profit.
KRChoksey has set a target of Rs 770, offering a 38.4 percent upside from its current price of Rs 556.35. VBL has expanded its presence by acquiring full ownership of two African bottlers: SBC Tanzania for Rs 1304 cr and SBC Beverages Ghana for Rs 127 cr.
Godrej Consumers Ltd
Godrej Consumer Products Limited (GCPL) is a Mumbai-based Indian multinational that offers products such as soap, hair colorants, toiletries, and liquid detergents. Godrej has reported a 5-year CAGR of 6.45 percent.
Anand Rathi has set a target of Rs 1485 for ITC, offering a 25% upside from its current price of Rs 1187.75. Despite expected flat Q3 volumes and temporary headwinds, the long-term outlook remains strong, with an average of 7% year-on-year organic growth in H1 FY25 and the past six quarters.
Written by Shwetha Sairam
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