ust cut out the sweat and chill withthese stock picks from the consumer space. ET Big Bucks selects evergreenwinners that boast of strong managements, good growth momentum and strong competitiveadvantages
CompanyFinancials | NetSales | Net Profit | M-Cap | Stock Price(Rs) |
Bajaj Auto | 7,488 | 1,101 | 28,579 | 2,824.55 |
ICICI Bank | 13,784 | 2,540 | 58,047 | 650.60 |
Pantaloon Retail | 1,084 | 38.55 | 4,294 | 45.70 |
ITC | 9,786 | 2,235 | 68,855 | 183.30 |
Bharti Airtel | 11,229 | 2,012 | 83,139 | 438.65 |
INOX | 107 | 18 | 982 | 163.60 |
PVR | 129 | 5 | 563 | 246.20 |
Figures in Rs Crore Except Stock Price Pantaloon's results for the year-ended June '05 |
'Only buy something thatyou'd be perfectly happy to hold if the market shut down for 10 years'
'Our favourite holding period isforever'
TWO pithy statements, coming from someonewidely acknowledged as one of the best investors of our time. The wisdom of holding on toa good company for good shouldn't be underestimated - take, for instance, Reliance andInfosys. There are three broad investment themes in the Indian market currently - Indianconsumer market, India outsourcing and infrastructure. Here, we focus on the Indianconsumer market to look at companies which offer longterm value to the shareholder.
ET Big Bucks takes a lookat top picks from sectors which cater to the Indian mass market. We trawled throughsectors like FMCG, auto, consumer finance, retailing, entertainment, telecom, travel andso on. We looked for companies with strong managements, good growth momentum and strongcompetitive advantages. Within this set, we finally zeroed in on one strong company fromeach sector. The result is a list of potential winners over the long term that stand tobenefit the most from increasing consumer spending - the likely outcome of the growthbeing witnessed today. The stocks listed by us are not cheap by any of the conventionalmetrics like P/E or book value, but that is not their USP either. Their USP is India's300-million strong middle-class that was once an article of faith and eventually turnedout to be a mirage. But as they say, this time it's for real.
FMCG - ITC: ITC over HLLis not an easy one, but in the past 2-3 years, ITC seems to be winning the debate. Thedeciding factor was the stable cash flows from its existing tobacco business beinginvested to create a strong position in areas like FMCG, hotels and others. ITC's tobaccobusiness is growing at 8-9%, while the FMCG segment clocked Rs 650 crore in FY06, a growthof almost 80% Y-o-Y. The company also enjoys the highest operating and net profit marginin the industry. With one of the largest dealer network in the country and an establishedsourcing and supply chain platform, the food verticals are all set to grow exponentially.ITC's key strength is its ability to keep finding newer growth engines on a regular basis.In the food business, it has carved out a market share of around 10% in the highlycompetitive biscuit market in a very short time, while in packaged staples like atta,'Ashirwaad' has grabbed 45% market share in short period. A cash-rich asset base hashelped ITC's brand-building capabilities and the company has demonstrated that byestablishing brands like Sunfeast, Ashirwaad and Mint O. The management has wisely focusedonly on areas where it has a robust backend. It has also invested in supply-chaininitiatives like e-choupals, which have opened up huge growth avenues. ITC has twodiversifications where may emerge as a leader: hotels and paper-boards.
So, if you are a conservative investor whodoesn't want to trade day in and day out, or someone who is too lazy to do it, you knowwhere to put your money and sit tight.