I purchased Merck at 1200 because it was cheap and I had found somewhere that Merck Germany had put up its consumer healthcare business for sale. These usually go in an M&A for 4-5x revs so I bought this knowing most of revs/profits come from consumer healthcare
I think the way to think about Merck now is that post transaction and taxes payable, there is ~700-750/sh of cash which post DDT is 600-650/sh
The vitamins business by itself can do an EPS of 75-80Rs in CY18 and closer to 90-95Rs in CY19 (1QCY18 was very weak). So this company, ex-cash is trading at low 20s P/E. It is probably the cheapest FMCG stock in India with crazy scope for growth esp. under P&G. You’ll probably start seeing Seven Seas kiosks in all pharmacies in India soon (Seven Seas which we all used to use 20 years ago now does sales of 10-15cr in India which is a joke, it should be a 500cr brand at least). We might even see higher end Neurobion/Polybion variants. Vitamins and other health supplements usually see a crazy S curve as a country’s GDP goes up. This should be a core holding in everyone’s portfolio.
Price caps are a risk but their tablets on avg. cost below 1Rs per capsule - it’s not a large part of a customers medical bill. This is compared to the foreign brand vitamins capsules that sell on Amazon at 10-20Rs per capsule on avg.