Dec 11, 2001|
Cadbury: Logging gains
The Cadbury stock has risen 25% in the past one month. In our story Cadbury India: Missing 'Diwali' sweetness we had said that the company would meet our projections for FY02 given that it had yet to account for a sizeable chunk of Diwali sales. Also, the management's statement that they would look at a buyback to hike their holding in the company may have served as a trigger.
We have projected a 12% growth in Cadbury's topline (Rs 6,308 m) in FY02. Bottomline projection is pegged at Rs 580 m (up 16% YoY). Based on these projections the stock is trading at a relatively high P/E of 30x FY02E earnings.
The launch of new brand 'Temptations' and relaunch of key brands would provide an impetus to topline growth in the coming months. The company is also looking at adding new brands to its confectionery portfolio. Cadbury's foray into confectionery has not been successful in the past. However, this time around the management is looking to consolidate its presence in confectionery through the acquisition route.
||Dairy Milk, 5 Star, Perk, Picnic, Nutties, Gems,
Milk Treat, Temptations, Break, Relish
||Googly, Frutus, Gollum
The urban per capita consumption of chocolates in India is only 0.2 kg per year as compared to 8.7 kg per year in UK. Though this data is not strictly comparable owing to the difference in the population demographics of the two countries, it nonetheless points to large scope for increasing market penetration. Cadbury commands 70% share of this nascent market and is likely to be a key player in shaping this segment's destiny.
The stock may see some weakness in the short term. However, over the longer term, Cadbury's proposed buyback plan as well as the company's strong fundamentals are likely to add strength to valuations.
More Views on News
Jun 20, 2017
While GSK consumer reported muted revenue growth, volumes are seen to be recovering.
Aug 21, 2017
Should you subscribe to the IPO of Apex Frozen Foods Ltd?
Jul 18, 2016
Will investing in Bajaj Corp yield high returns on account of a rural revival in sight?
May 4, 2016
Should you subscribe to Parag Milk Foods' initial public offering?
More Views on News
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 10, 2017
Bitcoin hits an all-time high, is there more upside left?
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407