Hi All,
Acomparison of Nestle and ITC P/E over last 10 years and probable reasons.
AVG. P/E |
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*The nestle data is for year jan-dec. The data has not been adjusted as a roughapproximation is enough. |
Nestle is a better business than ITC the numbers say,so says the market.The market on an average has valued a rupee of Nestle's earning higher than ITC consistently over last 10 years.This is obviously due to the better quality of Nestle's balance sheet and cash flow.Another reason which i stronglybelieve has led to this is thatNestle Generates larger portion of its revenue from consumer monopolies than ITC. Nestle generates 85% of its Net Revenue from consumer monopolies: ~40%necessity(Baby food formula,Milk powder etc) and ~45%mildaddiction or habit(confectioneries,coffee,Noodles),where as ITC generates ~48% of its Net Revenue from consumer monopolyaddiction(cigarette).