Fast Moving Consumer Goods (FMCG) sector in India continues to offer promising investment opportunities. This sector includes companies producing food, beverages, household products, batteries, and other consumer goods.
The government’s focus on rural development and schemes to enhance agricultural output is expected to stimulate consumer demand and spending in the FMCG sector. Furthermore, the growing demand for consumer goods driven by India’s large population and increasing rural consumption expenditure makes FMCG stocks a lucrative investment option.
The PEG ratio, which stands for Price/Earnings-to-Growth, compares a company’s Price-to-Earnings (P/E) ratio to its expected rate of growth. When the PEG ratio is below 1.0, it suggests that investors may be paying less per unit of earnings growth, making the stock potentially undervalued
Listed below are the such FMCG stocks that have a PEG ratio less than 1:
LT Foods Ltd
With a market capitalization of Rs. 6,593 crores, the shares of this rice food products manufacturing company started Friday’s trading session on a flatter note at Rs. 189.55 compared to its previous close of Rs. 189.95. During the trading session, the shares hit a high of Rs. 191.40, gaining 2 percent and are currently trading at Rs. 190 apiece.
Coming onto the company’s financial statements, the revenue decreased by 1.8 percent from Rs. 1,978 crores during the September quarter to Rs. 1,942 crores in the December quarter. On the other hand, the net profits declined by 2.5 percent from Rs. 157 crores to Rs. 153 crores during the same period.
Due to consistent operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 16.48 percent during FY 21-22 to 17.78 percent in FY 22-23, and, the return on capital employed (RoCE) zoomed from 14.76 percent to 17.61 percent during the same timeframe.
Furthermore, the net profit margin increased from 5.70 percent during FY21-22 to 6.10 percent during FY22-23.
Furthermore, the share is considered to be undervalued as the PE ratio stands at 11.6 times compared to the industry average of 34.4 times and the PEG ratio stands at 0.48 times, which means the market has underestimated its value with its projected earning potential.
Vadilal Industries Ltd
With a market capitalization of Rs. 2,667 crores, the shares of the ice cream manufacturing company started Friday’s trading session on a higher note at Rs. 3,710, gaining around 2 percent compared to its previous close of Rs.3,679.65 and are currently trading at Rs. 3,697 apiece.
Looking at the company’s financial statements, the revenue decreased by 40 percent from Rs. 288.71 crores during the September quarter to Rs. 174.26 crores in the December quarter. On the other hand, the net profits declined by 76 percent from Rs. 38.05 crores to Rs. 9.24 crores during the same period.
Due to increasing operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 22.47 percent during FY 21-22 to 35.40 percent in FY 22-23, and, the return on capital employed (RoCE) zoomed from 21.93 percent to 28.17 percent during the same timeframe.
Furthermore, the net profit margin increased from 6.41 percent during FY21-22 to 9.10 percent during FY22-23.
Furthermore, the share is considered to be undervalued as the PE ratio stands at 18.1 times during FY22-23 compared to the industry average of 34.4 times and the PEG ratio stands at 0.41 times, which means the market has underestimated its value with its projected earning potential.
Mishtann Foods Ltd
With a market capitalization of Rs. 1,984 crores, the shares of the rice manufacturing company started Friday’s trading session on a lower note at Rs. 18.74 compared to its previous close of Rs. 18.77. During the trading session, the shares hit a high of Rs. 18.84, gaining around 1 percent and are currently trading at Rs. 18.71 apiece.
Coming onto the company’s financial statements, the revenue increased marginally by 4 percent from Rs. 318 crores during the September quarter to Rs. 331 crores in the December quarter. In addition, the net profits increased by 7 percent from Rs. 87 crores to Rs. 93 crores during the same period.
Due to increasing operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 36.17 percent during FY 21-22 to 39.72 percent in FY 22-23, and, the return on capital employed (RoCE) zoomed from 38.45 percent to 46.44 percent during the same timeframe. Furthermore, the net profit margin increased from 6.30 percent during FY21-22 to 7.68 percent during FY22-23.
Furthermore, the share is considered to be undervalued as the PE ratio stands at 7.53 times compared to the industry average of 34.4 times and the PEG ratio stands at 0.14 times, which means the market has underestimated its value with its projected earning potential.
Written By Vaibhav Patil
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