Hehe Varada I know what you mean. I call this category of stocks as the 'Colgate' category. look at Colgate. Practically no diversification beyond toothpaste and toothbrushes (since eternity). Last 10yr sales growth is just around 15% CAGR and profit growth in the last 10yrs is just around 17% but worse it's been falling. 5yr profit growth is just 10%CAGR and TTM profit growth is negative!
You'd think the stock must be going down like there's no tomorrow. Hardly. It's off just 10% from 52wk highs pretty much in line with the markets.
Hawkins is the same story. No new products, very high RoE and strong brand, duopoly. Doesn't matter if recent performance is bad.
Basant Maheswari (a) believes in high RoE and (b) is probably holding from very low levels and (c) believes in middle class consumption story so this probably suits him. Anyway, there's no point in trying to second guess what the market will think/do (Keynesian beauty contest).
are the lofty valuations justified? Probably yes, because of strong brand and exceptional RoE and a commanding market share.
You also have to understand that such high RoE zero debt companies are perfect for leveraged buy outs so their stock cannot fall below a certain value. (See prof Bakshis vantage point article or Martin Whitmans "Aggressive Conservative Investor")
Will I pay 2000Cr for a company which generates 30Cr of operating cash flow (Hawkins) or 25000Cr for a company which generates 500Cr of OCF (Colgate)? No, but that's me.