Friday, July 31, 2009

GSK Consumer Healthcare

Like other FMCG companies, GSK Consumer reported very strong results. There are four big MNC owned FMCG companies that are investible in India - Hindustan Unilever, Nestle, Colgate and GSK Consumer. Others like P&G are not good long term buys, because the parent companies have 100% owned subsidiaries through which they are launching new products. These four are launching all the new products through these listed companies.

Unilever is barely growing its volumes - growth there is being led by pricing. The other three are growing very well on volume and pricing. Unilever, Nestle and Colgate are all trading in 25x-30x PE band. GSK is trading at 18x-20x. If GSK keeps up the growth momentum it has shown in the last several quarters, I wouldn't be surprised if the valuation gap closes. This is what has happened with Colgate over last 2 years vs Nestle.

Disclosure: Own GSK, positions might change at any time.

1 comment:

Penny Stock Info said...

Excellent area to be in healthcare.