1/N
Truman (ex US president) famously said “The only thing new in the world is the history you do not know”
With that in mind, I look at #Nestle financial history in India since 1993 (27 yrs of History)
Period 1 - CY93-CY2003
Sales -14.8% (CAGR)
NP - 21.8%
Mkt Cap - (9.1%)
Truman (ex US president) famously said “The only thing new in the world is the history you do not know”
With that in mind, I look at #Nestle financial history in India since 1993 (27 yrs of History)
Period 1 - CY93-CY2003
Sales -14.8% (CAGR)
NP - 21.8%
Mkt Cap - (9.1%)
2/N
Observations - Returns between '93 and '03 were low because of 2 factors - Starting PE was very high and Ending PE was decade low
Period 2 - "CY04-CY13"
Sales - 15.5% (CAGR)
NP - 15.6%
Mkt Cap - 23.3%
Observations - High returns becasue of low starting PE
Observations - Returns between '93 and '03 were low because of 2 factors - Starting PE was very high and Ending PE was decade low
Period 2 - "CY04-CY13"
Sales - 15.5% (CAGR)
NP - 15.6%
Mkt Cap - 23.3%
Observations - High returns becasue of low starting PE
3/N
Period 3 - "CY13 onwards
Sales - 5.3% (CAGR)
NP - 9.9%
Mkt Cap - 23%!!!
Observation - Sales/Earnings slowing (Maybe GST, Maggi debacle) but Mkt cap continued to grow 10% extra every year) to reach historic highs. This is bad setup for future returns.
Period 3 - "CY13 onwards
Sales - 5.3% (CAGR)
NP - 9.9%
Mkt Cap - 23%!!!
Observation - Sales/Earnings slowing (Maybe GST, Maggi debacle) but Mkt cap continued to grow 10% extra every year) to reach historic highs. This is bad setup for future returns.
4/N
I looked at 3 Valuation parameteres, Mkt cap/Sales, PE (Trailing) and PE (2 years hence). However since Margins have continued to increase over the years, I'll ignore Mkt Cap /Sales for now
Have taken 2Std deviations on Median (better indicator).
I looked at 3 Valuation parameteres, Mkt cap/Sales, PE (Trailing) and PE (2 years hence). However since Margins have continued to increase over the years, I'll ignore Mkt Cap /Sales for now
Have taken 2Std deviations on Median (better indicator).
5/N
My speculations over the next decade for #Nestle
1. EPS growth in 8-12%
2. Multiples may reach Median levels
3. This means poor returns
4. Mkt leaders in other industries are likely to outperform
@dmuthuk
@contrarianEPS
@rohitchauhan
@deepakshenoy
@SunilBSinghania
My speculations over the next decade for #Nestle
1. EPS growth in 8-12%
2. Multiples may reach Median levels
3. This means poor returns
4. Mkt leaders in other industries are likely to outperform
@dmuthuk
@contrarianEPS
@rohitchauhan
@deepakshenoy
@SunilBSinghania
