Haha,the thoughts that go on in my head,sometimes I wonder if I am crazy:)
With regards to the bubble reference,the business is indeed excellent but I am referring to the market capitalization of the company with regards to its profitability,how momentum is pushing it further higher and higher,this tends to happen with stocks that are in bull markets.
The management has also cleverly used their stock as currency(thereby diluting their stake) and acquired GSK Consumer in an all stock deal rather than paying cash,this same management made an open offer about 6-7 years ago when the stock was trading at 35 times 1 year forward earnings taking their stake to 75%,at that time the consensus was to tender the stock to Unilever PLC at Rs 600 per share.
The market cap is Rs 516,000 Crores,If you had this money would you buy the entire company?
What will happen if the company does not deliver on expectations…the consensus is that there will be a time correction but I don’t know and I think it’s very dangerous to assume that one can predict that outcome with certainty.
I like the company but I am not in love with it.