don’t see any fundamental reason for such negative reaction, is there something not known to us?
may be due to compa cola picking up market share
Primarily due to a significant miss on bottom-line expectations and margin compression for third straight quarter as well as on YoY Basis
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Q3 was consistenly low OPM as I can see Dec22, Dec23, Dec24, Dec25 at 14, 16, 16,15%
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We often ask ourselves how and why when the price does not move according to our understanding. But the fact of the matter is the market does not care! What matters is whether the company is performing well fundamentally. The results were decent but not great …. hopeful on their new initiatives. 14% growth at a P/E of 50x is not cheap as well but a decent summer should help the results given the poor show last year.
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I think the reason for the negative reaction is a combination of various factors. The domestic volume grew 10 % while revenue grew 6 % which implies competitive intensity (the price war started by Reliance) is hurting. Also, for the first time India revenues are below 50 % of consolidated revenues. With Twizza coming in, this percentage will fall even further in future. If India is a smaller portion of the overall business, company valuation will suffer as Africa gets lower valuation. Introduction of Rs.10 pack (in the East & WB) also may not go down well with the market. There were also concerns that company has not disclosed the visi-cooler count and retail outlet count (though this was done away with since the previous quarter). Any retrograde step on disclosures / transparency is also not liked by the markets.
The thesis that Reliance’s foray will lead to market expansion needs to play out now. Most global weather forecasting agencies have predicted hotter summer this year, with a high probability of El Nino June onwards. How things go this summer will be crucial for the stock.
(Disc.: Same as before, no change)
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