June 16, 2005

Checking on britannia industries - further update

After the last post, i started analysing britannia further. Liked the following in the company then
- An ROE of 25 %
- almost zero debt
- growth in upper single digits
- A p/e of around 13
- Cash / investment on balance sheet of around Rs 100 / share
In addition the company has good brands, good marketing and distribution infrastructure and reasonable economies of scale.

However on doing a bit of detailed check , i realised that almost 40-50 % of the NP is other income from investment activities which makes the operating pe of almost 20-22 ( after

So the company no longer looks very cheap. in addition i cant get my hands around how the management proposes to use the cash flows. Its core business needs very little cash. They are doing buybacks ...but not much ( share count has come down by some 5 - 10 % ). So the company seems to be piling cash and putting it into various investment.

now the above situation although not worrying , does not excite me into putting my money into the company. Most likely i will watch the company for some more time, before doing something

so i guess its time to move the next company !!!

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