Cadbury's FY01 profits up 42% - Views on News from Equitymaster

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Cadbury's FY01 profits up 42%

Feb 26, 2001

Cadbury has beaten market expectations and declared a remarkable 42% growth in profits for the year ended December '00. The company's profit growth in fourth quarter were even more encouraging at 61%. However, topline growth of the company in the December quarter slowed down to 3% compared to its outstanding performance in the past three quarters (1QFY01-20%, 2QFY01-13% and 3QFY01-12%). This could be due to stiff competition in the chocolate confectionery market from its competitor Nestle.

Year ended December (Rs m) FY00 FY01 Change
Sales 5,111 5,712 11.8%
Other Income 79 121 52.6%
Profit after Tax/(Loss) 367 520 41.8%
Net profit margin (%) 7.2% 9.1%  
No. of Shares (eoy) (m) 23.8 35.7  
Diluted Earnings per share 10.3 14.6  
P/E (at current price) 43 30  

Nevertheless, even if we exclude other income, Cadbury's profits have shown a fantastic growth of 39% which is comparatively higher than its peers in the industry.

At the current market price of Rs 440 Cadbury trades at a P/E multiple of 30 times with a market cap to sales ratio of 3 times. The company's current valuations are comparatively less than HLL and Nestle which get P/E's of 35 and 36 times respectively.

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