Majority of investors have a complaint with Avenue Supermart is that it’s so overvalued and running at PE multiples of 120+ and at times 200+ (like nowadays). One thing is well proven in the markets is that a stock’s price and PE is always a function of market’s perception about it. Higher the confidence in the company’s growth, higher the price/PE.
This reminded me of a comment from @hitesh2710 in which he explains why some high quality businesses remain at elevated multiples for a long time. And I think his explanation suitably applies to Dmart as well.
Regarding valuing companies like Asian Paints, pidilite and page inds, one needs to take into account the kind of longevity of growth these companies have. Some studies done my Motilal Wealth Creation studies indicate that if the company is a high quality, less prone to disruption and isnt exposed to too many variables and has a very long runway for growth, then over a pretty long period of time say 10 plus years, the price at which the stock is bought might not mean much and the investment will yield very good returns. I think the coffee can investing also stresses on the same points.
On how to buy these companies the ideal way is to go ahead in a SIP kind of method If one is buying for 10 plus years then I think the buying also has to be done on an extended timeframe.
Key remains in buying the right companies and not going by companies currently in vogue and hence market favorites. One has to see long term history of these companies of how they have fared over good and bad times and then take a call. Usually the companies that qualify in these lists would be dominant market leaders in their segments and the opportunity size in the sector is big and growing as the years go by. These need to have top class managements, great balance sheets and excellent financial ratios.
These companies will always fail the PEG test as these are well discovered companies and there is nothing unknown about them. Over a long time period even the minimal variables in these business tend to equalise. e.g in case of asian paints crude price is important and it tends to go up and down but over a longer time period these things tend to normalise.
The other option to buy is to buy them during market meltdowns when during the final phases of market corrections these too correct and one needs to have courage and conviction and money to buy these type of companies.