Hindustan Foods: Leading FMCG Contract Manufacturer at Discount

Vinod Moras of Highwest Global Management presented his investment thesis on Hindustan Foods Limited (India: HNDFDS) at Asian Investing Summit 2026.

Thesis summary:

Hindustan Foods is India’s largest and most diversified FMCG contract manufacturer, operating over 40 plants across more than 10 states and serving 50+ clients including Hindustan Unilever, Reckitt, Danone, PepsiCo, Emami, Dabur, Bata, and Skechers. The business produces soaps, shampoos, detergents, ice cream, food and beverages, OTC healthcare, shoes, and household insecticides. HFL was a struggling single-plant Goa operation for nearly three decades until the Vanity Case Group, led by managing director Sameer Kothari, acquired the controlling stake from the Dempo Group in 2013 through a reverse merger. Under the new team, HFL has grown revenue and earnings at a ~36% CAGR over the last five years, yet the stock has advanced just 4% annualized, creating an attractive gap.

HFL is a proxy for India’s consumer story without having to pick a winning brand. The Indian FMCG market is ~$150 billion growing 10-12%, with per capita consumption still a fraction of regional peers. The $25 billion Indian FMCG contract manufacturing market remains ~80% unorganized, and asset-light strategies among brand owners, D2C and quick-commerce proliferation, private-label expansion by retailers, and GST-driven formalization are all pushing outsourcing volumes toward organized players of scale. HFL is the one-stop beneficiary.

The business rests on three models. Dedicated manufacturing — 73%+ of revenue on 7-10 year take-or-pay contracts earning a fixed 15-17% ROE — provides full earnings visibility with no demand or inventory risk. Anchor-tenant (~17%) and private label (<10%) deliver 18-20%+ ROE with incrementally higher risk. Switching costs are high, client churn minimal, and management has a track record of turning around acquired distressed assets.

Gross block has grown ~5x in five years, with more than half deployed into ice cream (already the largest contract manufacturer in India within five years) and footwear, two underpenetrated categories growing well above FMCG. Vinod expects PAT to compound at a 36% CAGR through FY28 as capacity ramps, with ROE moving from ~15% to above 20%. Key risks are HUL client concentration (~25% of revenue), mix shift toward higher-risk models, capex execution, leverage (managed below 1x debt-to-equity), and the inherently volatile shoe business.

The shares recently traded at INR 502, or ~21x FY28 earnings, against FMCG contract manufacturing peers at ~29x and branded FMCG peers at ~42x. Given a 36% FY26-FY28 PAT CAGR that exceeds both peer groups, Vinod views HFL as offering an attractive risk-reward on an earnings compounder with genuine moats.

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About the instructor:

Vinod Moras is a seasoned value investor with over a decade of experience in Asian equities. He is currently an Investment Manager at Highwest Global Management, overseeing the firm’s India portfolio within its Asia-focused, long-only strategy. Previously, he was Head of Investments at Sixteenth Street Capital, leading research and portfolio strategy for South and Southeast Asia. Vinod also held investment roles at KIARA Advisors and APS Asset Management. Vinod brings operational experience to investing, having worked in the automotive and oil & gas industries before transitioning to finance. He has been a member of the Value Investors Club (VIC) and holds an undergraduate degree in engineering and master’s degree in finance from NYU Polytechnic Institute.