P

P

Lord Jesus Christ Says...

For what shall it profit a man, if he gain the whole world, and suffer the loss of his soul? Read more at:

17 Feb 2018

SHARE MARKET--What are some excellent (FMCG) stocks for long term investment?



One of the most ignored sector in FMCG is dairy sector. The listed companies in this sector are still small (the biggest having just 5000 crs market cap) and have a lot of growth potential, particularly in value added segment like flavored milk, cheese, butter, curd, paneer, yoghurt, basumathi rice etc.


People from Mumbai might be familiar with these products,




These brands belong to Parag Milk Foods ltd, the newly listed dairy company. The company is focusing on increasing its distribution network across India and is going to double the advertising spend in coming years. I like this company because it’s focusing on high margin segments like cheese and flavored milk. In fact, Parag may become the first private dairy to export cheese to Russia.

Another company to look at, which is the biggest private dairy in India, is Hatsun Agro Ltd. This company is mainly focused on milk, curd and ice creams. It has shown a huge growth in turnover and operating profits over the last decade.


Another promising company id Sanwaria consumer ltd.[price mere rs.22 only)sanwari busmathi rice is very famous and they are exporting to Iran also.


An interesting thing to note is that the operating margin of these companies is just 8–9% currently, which can increase substantially with scale and brand recognition. ROCE is above 25%, operating cash flows are good and valuation on EV/EBITDA is 15–18, cheaper than most of the established fmcg players. The growth rate is faster than almost all established FMCG companies.

Keep in mind that these companies are not for traders or speculators, only long term investors.



No comments:

Post a Comment