This article provides an in-depth comparison (ITC vs HUL) between the two biggest FMCG companies in India. In this article, we have compared the business, financials, fundamentals, and stock performance of both ITC and HUL.
This will help you evaluate which one is better for investment. But before I proceed, please note that our analysis is only for educational purposes and not to provide stock tips. This article is to empower you with the right knowledge so that you can make an informed investment decision.
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ITC vs HUL A Snapshot
With more than 44 brands across 14 categories, HUL is part of the daily life of millions of people in India. HUL claims that 9 out of 10 households in India use one or more products of HUL. There are high chances even you are using products of HUL.
Initially known as the Imperial tobacco company. ITC was incorporated in 1910, with its first office in Kolkata. Later in 1913, the company launched its state-of-the-art tobacco factory in Banglore. On its 16th birthday, ITC bought land in Kolkata for a new office to mark the beginning of an eventful journey into India’s future.
Today, the office is known as Virginia house, one of Kolkata’s most important landmarks. As of mid-2020, ITC’s tobacco business contributed around 74% to its profit.
ITC’s FMCG business is one of the fastest-growing in the country, with a portfolio of 25 mother brands in foods, personal care & hygiene products, education & stationery products, agarbattis & matches.
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ITC business
ITC has 13 businesses in 5 segments, launched over 120 new products in the financial year 2020-21, ITC has a presence in more than 100 countries and the company’s FMCG products of ITC are available in 6 million retail outlets, ITC’s products reach over 150 million Indian households.
ITC’s Agri-business division is one of India’s largest exporters of agricultural commodities. Helping over 4 million farmers with E-CHOUPAL, by providing them with internet access. This initiative helps in informing and empowering the farmers to improve the quality of agricultural goods. There are 6,100 E-CHOUPALS in operation in 35,000 villages in 10 states. Each installation serves an average of 600 farmers in the surrounding 10 villages, within about a five-kilometer radius.
In the stationery market, ITC has a 25% market share under the brand name Classmate.
ITC has its presence in businesses like Cigarette, FMCG, Agri, Paperboards and packaging, Hotels, and Infotech.
ITC has filed over 900 patents.
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Brands of ITC
ITC has a lot of other brands too, some of them are:
- Sunfeast (biscuits, cookies & cakes).
- Kitchens of India ( ready to eat gourmet cuisine, masala mixes, chutneys & conserves ).
- B Natural ( juices & beverages ).
- Gumon ( gums ).
- Fabelle ( luxury chocolate ).
- Sunbean ( gourmet coffee & beaten coffee ).
- sunfeast wonderz milk ( daily beverages ).
- ITC master chef ( blended spices, frozen prawns, snacks & kebabs ).
- Farm land ( fresh potatos, frozen vegetables and tomato puree ).
- Sunrise.
- Dermafique ( premium skin care ).
- Enagae ( colognes, deodorants & perfume sprays ).
- Nimly ( dishwash gel ).
- Nim wash ( vegetable & fruit wash ).
Brand Leadership of ITC
- Aashirvaad is no.1 brand in aata.
- Yippee is no.2 in noodles.
- Bingo is no.1 in the bridges segments of snack foods and no.2 overall in snacks & potato chips.
- Sunfeast is no.1 in the cream biscuit segment.
- Savlon is no.1 in surface sidinfectant spary.
- Classmate is no.1 in notebooks.
- Fiama is no.2 in liquid bodaywash category.
- Mangaldeep is no.2 in Aggarbattis.
- Engage is no.2 in deodorants
Over 41% of the energy consumed at ITC is from renewable sources.
Also read: ITC share price target 2022, 2025, 2030.
ITC business: Key points
The branded packages foods business remain focused on addressing emerging, consumer needs with innovations anchored on the vectors of health, wellness, immunity, and naturals.
ITC’s brand Sunrise is the clear market leader in eastern India, in the fast-growing spices category with a rich heritage and brand legacy of over 70 years.
In the frozen snacks category, ITC Master Chef products comprising 30 differentiated variants continuos to garner increasing consumer franchise. During the financial year 2020-21, availability was extended to 100 new markets in a short period taking the aggregate to 135 towns.
Exports by the branded packages foods businesses recorded robust growth led by atta and biscuits. The businesses currently export to over 50 countries.
Demonstrating a high degree of agility and responsiveness, the personal care products Business rapidly expanded manufacturing capacity manifold across categories – Handwash 4.5x, Sanitizers 100x, Floor cleaner 2.3x, Soaps & Antiseptic Liquids 6x.
Savlon witnessed significant revenue growth and reached nearly Rs 1200 crores in terms of consumer spends during the year.
The educational and Stationery products industry was severely impacted during the year due to COVID-19 induced lockdowns and closure of educational institutions for the major part of the year.
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Hul Business At a Glance
HUL is India’s fast-moving consumer goods company, nine out of ten Indian households use one or more products of HUL.
Hindustan Unilever has over 4,500 distributors, 1,150 suppliers, over 8 million stores sell HUL products, 14 brands in India’s top 100 most trusted brands 2020, and 14 brands with a turnover of over Rs 1,000 crore.
30% of the revenues are from Homecare, 39% of the revenues are from Beauty & personal care, 29% of the revenues are from Foods & Refreshment, and 2% from others.
HUL is one of the largest advertisers in the country based on media spends. HUL creates an increasing amount of tailored digital content themselves to connect with consumers and make it easy for choosing their brand.
51% of the HUL’s foods & refreshment portfolio met the highest nutritional standards in 2020, based on globally recognized dietary guidelines.
Brands of HUL
HUL has a lot of other brands too, some of them are:
- Horlicks
- Boost
- 3roses
- Ulilever Pure it
- Sunlight
- Rexona
- Hellmann’s
ITC vs HUL : Business comparison
More than 70% of ITC profits are from the cigarette Business, While HUL is totally into the FMCG business. If we observe the brands of both ITC and HUL, We can clearly say that the brands of HUL are more famous than ITC.
ITC’s hotels business is cash-intensive and ITC is not generating good returns from its hotel business.
ITC generates a lot of cash from its cigarettes segment, if ITC allocates cash towards its FMCG segment instead of giving dividends, it will boost ITC’s FMCG portfolio as well as revenues from the FMCG segment. ITC is paving a path to become an FMCG giant, While HUL is more established than ITC in the FMCG sector.
HUL has a market share of 54% in the Skincare segment, 55% market share In the Dishwashing detergents, 47% market share in the Shampoo, and 37% market share in the Personal care segment. 20% of their business is growing at a pace of 2x.
ITC vs HUL: Financials
| ITC | HUL | |
|---|---|---|
| Market Cap | 2,94,,086 CR | 6,36,621 Cr |
| Price To Earnings ( P/E ) | 21.53 | 78.27 |
| Sales Growth ( 5 Years ) | 4.45% | 8.17% |
| Profit Growth ( 5 Years ) | 6.92% | 13.9% |
| ROE ( 5 Years ) | 23.8% | 69% |
| ROCE ( 5 Years ) | 32.8% | 95% |
| Debt to Equity | No Debt | No Debt |
Financially both companies are very strong. But HUL is performed better than ITC, HUL outperformed ITC in terms of profit growth, sales growth, ROE, and ROCE with a huge difference.
The main thing is, PE of HUL is 78.27, whereas the PE of ITC is just 21.53. We can clearly say that ITC is hugely undervalued. The PE of every company in the FMCG sector is over 50, whereas ITC is just traded at a PE multiple of 21.
Also read : 5 Important financial ratios.
ITC vs HUL: Profit & Loss
| ITC | HUL | |
|---|---|---|
| Net sales | 45,485 Cr | 45,996 Cr |
| Profit Before Tax | 17,164 Cr | 10,490 Cr |
| Net Profit | 13,031 Cr | 7,954 Cr |
| EPS | 10.59 | 33.85 |
Here, most of the ITC’s sales and profit are from its cigarettes business, whereas HUL sales and profit are from the FMCG business. In terms of profits, HUL has generated more profits and revenue than any other company in the FMCG sector.
Balance Sheet Comparison
| ITC | HUL | |
|---|---|---|
| Equity & Liabilities | ||
| Share Capital | 1,230 | 235 |
| Total Reserves | 57,773 | 47,199 |
| Borrowings | 5.28 | 0 |
| Other N/C Liabilities | 2,396 | 9,841 |
| Current Liabilities | 10,174 | 10,841 |
| Total Liabilities | 71,580 | 68,116 |
| Assets | ||
| Net Block | 21,798 | 51,044 |
| Capital WIP | 3,329 | 623 |
| Intangible WIP | 3.50 | 0 |
| Investments | 13,326 | 312 |
| Loans & Advances | 1,306 | 1,901 |
| Other N/C Assets | 0 | 613 |
| Current Assets | 31,815 | 13,623 |
| Total Assets | 71,580 | 68,116 |
If you don’t know how to read a balance sheet or not understanding the above table, highly recommend you to read the Balance sheet analysis for beginners.
Ratings
| Ratings | ITC | HUL |
| Crisil | ||
| Long term rating | AAA | AAA |
| Short term rating | A1+ | —— |
| ICRA | A1+ | —— |
Shareholding Pattern
| ITC | HUL | |
|---|---|---|
| Promoters | 0% | 61.9% |
| FII | 11.74% | 15.11% |
| DII | 42.4% | 10.75% |
| Public | 45.86% | 12.24% |
| Others | 0 | 0% |
If you think of Reliance, the first thing that comes to your mind is Mukesh Ambani, if you think of Microsoft, the first thing that comes to your mind is Bill Gates, if you think of Facebook, the first thing that comes to your mind is Mark Zukerberg. But what about ITC?. Well, it’s a professionally managed company with 0% promoter holding.
ITC vs HUL: Stock Performance
For the past 5 years, ITC is in consolidation mode, whereas HUL is continuously rallying. ITC share price is fallen at a negative CAGR of -0.7% over the past five years, whereas HUL’s stock price is grown at a CAGR of 25.4% over the last five years.
Also read : Basic stock valuation methods
ITC vs HUL: Which One is Better?
We have compared ITC and HUL in terms of financials, fundamentals, business, brands, stock price, and profit & loss statements.
In all of those, HUL has significantly performed better than ITC. But the main thing is, ITC is hugely undervalued, ITC is trading at a PE multiple of just 21. Whereas other FMCG stocks are trading over 50 PE multiple.
In recent times, after the Covid recovery, most of the FMCG companies rallied a lot. But ITC has not participated in the rally. Most of the broking companies also raised the target price for ITC.
FMCG companies are trading at an average PE multiple of 66, whereas ITC is trading at a PE multiple of 21.
So, if you want to invest in FMCG stocks and are confused about whether to choose HUL or ITC, ITC is a better choice right now. Because ITC is undervalued and at the same time HUL is overvalued and Both ITC and HUL has a lot of growth opportunity & potential in the future.
Frequently Asked Questions
Who is the biggest competitor of HUL?
HUL is the biggest company in the FMCG sector. No other company is near to HUL in terms of revenues and profits. Almost every brand of HUL is famous and every brand has a good brand value, the main reason for this is HUL spends more than any other FMCG company on advertising. The biggest competitor HUL is Nestle. Nestle is the world’s largest food company in terms of revenue, almost twice the revenue of coca-cola in 2020.
Which is better ITC vs HUL
Both ITC and HUL are better, but HUL has more brands and higher brand value than ITC in the FMCG sector. most of the ITC revenue is from the cigerattes sector, while HUL revenue is from the FMCG sector. As an FMCG company, HUL is far better than ITC. But for investment ITC is better than HUL, the reason for this is ITC is trading at lower valuations, whereas HUL is trading at higher or premium valuations.
What is the strength of HUL?
The main strength of HUL is the Brand value, almost every brand of HUL is famous and has good brand value. Some famous brands of HUL are Dove, Pepsodent, Sunsilk, Boost, Horlicks, Lifebuoy, Axe, Red Label, Taj Mahal, Knorr, etc. HUL has a strong presence in segments like food, home care, beauty, and personal care.
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