Best FMCG Stock: HUL vs ITC

Business Overview

ITC

ITC, incorporated in 1910, operates is four segments - cigarettes, paperboards, paper, and packaging products, agri-business, and other FMCG products such as personal care products, packaged foods, stationery products, and others.

ITC Cigarettes contributes 44% of the company's revenue. Its popular cigarette brands, are Classic, Gold Flake, and Wills Navy Cut.

Then another significant revenue share of around 30% is contributed by the FMCG others segment, as ITC is one of the leading FMCG marketers in the country.

It has over 25 brands and hundreds of products under each, which reach almost every Indian household. Some of the most popular brands include Aashirvaad, Mangaldeep, Fiama, Classmate, Bingo, and others.

Coming to the Agri-business, ITC is the largest exporter of agricultural products in India. The segment contributes to around 16% of the company's revenue. Some of the commodities that ITC exports and sells in the domestic market are wheat, coffee, soya, rice, etc.

Finally, around 9% of the revenue comes from the paper and packaging business.

For more details, see the ITC company fact sheet and quarterly results.

HUL

Hindustan Unilever (HUL) is a FMCG giant that deals in home care, personal care, foods, and beauty and wellbeing products.

The company was incorporated in the 1950s by merging three other companies that were started by Unilever in India back in the 1930s. HUL owns over fifty brands which include across FMCG categories.

HUL's homecare business includes brands like Surf Excel, Rin, Wheel, Domex, and other detergents, purifiers, and other related products, and together they contribute to around 37% of the total revenue.

Coming to the beauty and personal care segment, contributing about 23% to the revenue, includes brands like Sunsilk, Closeup, Lakme, Lifebuoy, Ponds, and more.

The food segment contributes about 22% of the revenue, and some of the most popular brands that HUL offers under this segment include Brooke Bond, Lipton, Bru, Kissan, Kwality Walls, and others.

Finally, the personal care segment contributes to around 15% of the business.

For more details, see the HINDUSTAN UNILEVER company fact sheet and quarterly results.

Marketcap

As per market capitalization, HUL is bigger than ITC. However, both companies are the two largest companies in the FMCG space.

Revenue

During FY26, revenue of ITC was primarily driven by strong growth across the FMGC segment. Solid demand was witnessed across staples, frozen snacks, dairy products, personal care products, and others.

Notebook sales also witnessed a rebound despite cheap imports and price challenges due to regional players. The segment's revenue grew around 10% YoY during the fiscal (excluding notebooks' revenue).

During the year, the cigarette business delivered strong performance till January 2026, but then, due to the new tax regime for tobacco products, growth was hit. The segment's revenue grew 8.2% YoY.

Agri business was also sluggish due to geopolitical tension and rising fuel prices. Revenue from this segment grew only 3% YoY during the year.

The gross revenue growth for FY26 stood at around 10.3% YoY.

Coming to the HUL, the overall revenue for FY26 grew 5% (underlying sales growth - USG).

Homecare business segment grew 4% (USG). Beauty and wellbeing segment grew 6%, food business grew 5%, and personal care segment's revenue grew 4% during the fiscal.

Revenue Growth

As far as revenue is concerned, ITC had better revenue growth compared to HUL during FY26. Even if you consider the long-term revenue growth, the 3-year CAGR of ITC is 3.6%, while that of HUL is 2.1%.

Profitability

During FY26, profits of the FMCG sector were driven by strong domestic structural drivers, robust rabi crop, and GST cuts.

Having said that, the West Asia conflict and other geopolitical disruptions have continuously affected the sector throughout the fiscal year, and ITC and HUL are no exception.

Profit Growth

The 3-year CAGR profit of ITC stood at 1.95%, while that of HUL was 1.6%.

OPM and NPM Margins

In the case of both ITC and HUL, the operating profit margin (OPM) and net profit margin (NPM) have declined over the past three years.

Having said that, ITC witnessed a sharper decline in the profitability margins compared to HUL, even though ITC had a higher profit growth during the period.

Management's Efficiency

Coming to the financial efficiency of the company, return on equity (ROE) of ITC almost remained the same between FY24 and FY26, while in the case of HUL, it increased marginally from 20.26% to 21.72%.

Financial Efficiency Ratios

But the return on assets (ROA) declined marginally during the period for both companies.

Debt Profile

Coming to the debt profile of these two FMCG companies.

The total debt of ITC has surged sharply between FY24 and FY26 from Rs 113 million (m) to Rs 21,862 m.

Having said that, the company has successfully kept its long term debt to equity at zero because the rise in total debt came from an increase in short-term liabilities, and not in long-term debt.

On the other hand, HUL has kept its long term debt to equity at nil for all these years but also reduced its total debt to zero during FY26.

Total Debt & Long Term Debt/Equity Ratio

Thus, both ITC and HUL have an excellent debt profile, but HUL stands out as it has also reduced its short-term liabilities over these years as well.

Dividends

Both ITC and HUL pay regular dividends as mature companies.

The dividend payout of ITC has declined from 83.91% in FY24 to 51.68% in FY25, but it again rebounded, and during FY26, the company offered a dividend payout of 88%.

Dividend yield of the company has also surged steadily over these years from 3.21% in FY24 to 5.1% in FY26.

On the other hand, HUL paid regular dividends, but its dividend payout declined from 96.04% in FY24 to 64.06% in FY26.

Dividend yield of HUL also grew marginally from 1.85% in FY24 to just 1.99% in FY26.

Dividends

Thus, looking at the dividends, ITC seems to be a better dividend payer with a higher dividend yield and dividend payout ratio currently.

Outlook

ITC is rapidly scaling up its Nicotine project to boost its export capacities. For the same, it has been expanding its state-of-the-art manufacturing facility at Mysuru.

It has also introduced hundreds of new products under its FMCG Others segment, ranging from health and nutrition to hygiene and others.

Coming to the outlook for HUL, the company has been rigorously investing in new store coverage. During FY26, the company added 2 lakh new stores to its roster.

HUL has also committed capex of Rs 20 bn for premium formats and setting up dedicated Q-commerce stores, which is helping the company strengthen its omni-channel execution.

Share Price Performance

The share price of both the FMCG companies has declined over the past year in sync with the overall FMCG sector. This decline happened despite GST cuts, which boosted demand. Rising prices, geopolitical tensions, and high fuel prices, are taking a toll on the sector.

Share Price Comparison

ITC share price declined over 32% during the past year. The new tax rates levied on tobacco products have hurt investor sentiment.

HUL's share price declined 8.4% during the period, a lower decline than ITC.

Final Thoughts

ITC offered better revenue growth and higher profit growth, but margins are declining relatively faster than HUL, which has offered relatively lower revenue and profit growth.

On the other hand, HUL is expanding rapidly and already has solid capex plans in the pipeline, offering a better growth prospect.

From the dividend's perspective, ITC is a clear winner as its dividend payout as well as its dividend yield have been rising, while HUL's dividend payout declined and its dividend yield remained muted.

Thus, ITC is ahead in some respects while HUL is ahead in others.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

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Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...