According to Citigroup's India-based analyst Princy Singh, M&A and foray into new product segments to drive growth was the focus of all the six consumer goods companies present at Citigroup India conference - namely Dabur, HLL, Marico, Godrej Consumer, Asian Paints and United Spirits.
However, the companies are wary of high valuations of the targeted acquisitions, Singh said in a report for the bank's institutional clients.
FMCG giant HLL, which is planning to expand its presence in the food segment, is also bullish on acquisitions and is mulling a couple of deals to kick start its foods business expansion, bankers said.
Another domestic consumer goods firm Marico, which has acquired HLL's hair oil brand Nihar to strengthen its position in the hair care segment and to pre-empt competition from intensifying further, is also eyeing more earnings-accretive acquisitions after buying out a couple of personal care brands in overseas markets.
Meanwhile, United Spirits is close to acquiring global scotch major Whyte & Mackay and expects the deal to be accretive to its earnings in the first year itself, the bankers said.
Earlier, Vijay Mallya group firm had expanded its market share in the Indian liquor industry to 53 per cent after acquisition of Shaw Wallace.
United Spirits plans to fund the Whyte & Mackay deal, due diligence for which is going on, through debt that would be equally divided between the books of the Indian and Scottish firms.Besides needs for further expansion, the gains reaped by past M&A deals are also boosting the companies' appetite for new deals. The merger and acquisitions have bore fruits for a number of other players also in this space, including Asian Paints, Tata Tea and Godrej Consumer.
Tata Tea got a strong foothold worldwide in the tea segment with its Tetley acquisition and the company is now looking to expand to other beverage segments on this platform, Citigroup said.
Asian Paints, now looking into the domestic market for further expansion, got access to as many as 22 emerging markets with its Berger International acquisition, which it has integrated and turned around successfully.
Godrej Consumer also got strong foothold in the UK and South Africa with its acquisition of Keyline and Rapidol, which also served as complementary brands for the company.